( i) What is the level of significance? State the null and alternate hypotheses.

( ii) What sampling distribution will you use? What assumptions are you making? What is the value of the sample test statistic?

( iii) Find ( or estimate) the P- value. Sketch the sampling distribution and show the area corresponding to the P- value.

( iv) Based on your answers in parts ( i) to ( iii), will you reject or fail to reject the null hypothesis? Are the data statistically significant at level a?

( v) Interpret your conclusion in the context of the application.

5. How profitable are different sectors of the stock market? One way to answer such a question is to examine profit as a percentage of stockholder equity. A random sample of 32 retail stocks such as Toys ‘ ’ Us, Best Buy, and Gap was studied for x1 profit as a percentage of stockholder equity. The result was x1=13.7. A random sample of 34 utility ( gas and electric) stocks such as Boston Edison, Wisconsin Energy, and Texas Utilities was studied for x2 profit as a percentage of stockholder equity. The result was x2 = 10.1. Assume o1=4.1 and o2 =2.7.

( a) Let m1 represent the population mean profit as a percentage of stockholder equity for retail stocks, and let m2 represent the population mean profit as a percentage of stockholder equity for utility stocks. Find a 95% confidence interval for m1 – m2.

( b) Examine the confidence interval and explain what it means in the context of this problem. Does the interval consist of numbers that are all positive? all negative? of different signs? At the 95% level of confidence, does it appear that the profit as a percentage of stockholder equity for retail stocks is higher than that for utility stocks?

c) Test the claim that the profit as a percentage of stockholder equity for retail stocks is higher than that for utility stocks. Use a = 0.01

6. A random sample of 17 wolf litters in Ontario, Canada, gave an average of x1=4.9 wolf pups per litter with estimated sample standard deviations1=1.0. Another random sample of 6 wolf litters in Finland gave an average of x2=2.8 wolf pups per litter with sample standard deviation s2 =1.2

( a) Find an 85% confidence interval for m1-m2, the difference in population mean litter size between Ontario and Finland.

( b) Examine the confidence interval and explain what it means in the context of this problem. Does the interval consist of numbers that are all positive? all negative? of different signs? At the 85% level of confidence, does it appear that the average litter size of wolf pups in Ontario is greater than the average litter size in Finland?

( c) Test the claim that the average litter size of wolf pups in Ontario is greater than the average litter size of wolf pups in Finland. Use a = 0.01

7. Locander et al. also studied the accuracy of responses on questions involving more sensitive material than voter registration. From public records, individuals were identified as having been charged with drunken driving not less than 6 months or more than 12 months from the starting date of the study. Two random samples from this group were studied. In the first sample of 30 individuals, the respondents were asked in a face- to- face interview if they had been charged with drunken driving in the last 12 months. Of these 30 people interviewed face- to- face, 16 answered the question accurately. The second random sample consisted of 46 people who had been charged with drunken driving. During a telephone interview, 25 of these responded accurately to the question asking if they had been charged with drunken driving during the past 12 months. Assume that the samples are representative of all people recently charged with drunken driving.

( a) Let p1 represent the population proportion of all people with recent charges of drunken driving who respond accurately to a face- to- face interview asking if they have been charged with drunken driving during the past 12 months. Let p2 represent the population proportion of people who respond accurately to the same question when it is asked in a telephone interview. Find a 90% confidence interval for p1-p2

( b) Does the interval found in part ( a) contain numbers that are all positive? all negative? mixed? Comment on the meaning of the confidence interval in the context of this problem. At the 90% level, do you detect any differences in the proportion of accurate responses to the question from face- to- face inter-views as compared with the proportion of accurate responses from telephone interviews? ( c) Test the claim that there is a difference in the proportion of accurate responses from face- to- face interviews compared with the proportion of accurate responses from telephone interviews. Use a = 0.05