Business and Economic Statistics

  1. U.S. Unemployment. Barron’s reported that the average number of weeks an individual is unemployed is 17.5 weeks. Assume that for the population of all unemployed individuals the population mean length of unemployment is 17.5 weeks and that the population standard deviation is 4 weeks. Suppose you would like to select a sample of 50 unemployed individuals for a follow-up study.

a. Show the sampling distribution of x-bar (what is the probability distribution? What are the parameters (e.g. mean and standard deviation?), the sample mean average for a sample of 50 unemployed individuals.

b. What is the probability that a simple random sample of 50 unemployed individuals will provide a sample mean within 1 week of the population mean?

c. What is the probability that a simple random sample of 50 unemployed individuals will provide a sample mean within 1/2 week of the population mean?

  1. State Rainfalls. The state of California has a mean annual rainfall of 22 inches, whereas the state of New York has a mean annual rainfall of 42 inches. Assume that the standard deviation for both states is 4 inches. A sample of 30 years of rainfall for California and a sample of 45 years of rainfall for New York has been taken.

a. Show the probability distribution of the sample mean annual rainfall for California.

b. What is the probability that the sample mean is within 1 inch of the population mean for California?

c. What is the probability that the sample mean is within 1 inch of the population mean for New York?

d. In which case, part (b) or part (c), is the probability of obtaining a sample mean within 1 inch of the population mean greater? Why?

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