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QBA Final Exam (May 31, 2021)

The document outlines a final exam with multiple problems testing statistical concepts. Problem 1 asks about point estimators of a population mean and their bias and efficiency. Problem 2 deals with confidence intervals and hypothesis testing for a sample mean. Problem 3 involves interpreting coefficients from an OLS regression and conducting hypothesis tests. Problem 4 tests differences between sample means and variances from two populations.

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44 views12 pages

QBA Final Exam (May 31, 2021)

The document outlines a final exam with multiple problems testing statistical concepts. Problem 1 asks about point estimators of a population mean and their bias and efficiency. Problem 2 deals with confidence intervals and hypothesis testing for a sample mean. Problem 3 involves interpreting coefficients from an OLS regression and conducting hypothesis tests. Problem 4 tests differences between sample means and variances from two populations.

Uploaded by

aamna
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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QBA201: Final Exam (Monday, May 31, 2021); 11:00-1:00 pm

Problem 1. Let X1 and X2 be a random sample from a population with mean μ and variance σ2.

Consider the following point estimators of μ:

̂ (1) = .7 X1 + .3 X2

̂ (2) = .1 X1 + .9 X2

a. (1 point) Are these point estimators unbiased? Show your work.

b. (1 point) Which point estimator is a more efficient estimator of μ? Show your work.

c. (1 point) Suggest a point estimator, which is both unbiased and most efficient estimator
of μ. Show your work.

d. (1 point) Illustrate your answers in parts (a), (b), and (c) in one graph.

e. (1 point) Give an intuitive reason for your answer in part (c). Explain clearly.

Problem 2. In a large industry, the true mean value of wages (μ) is unknown, but the standard
deviation σ = 2.4. A random sample of 100 wages is selected in order to estimate the true mean
value of wages.

a. (1 point) Find the standard error of the sample mean (ܺത). Show your work.

b. (2 points) The probability is .05 that the sample mean value of wages exceeds the true
mean value by how much? Show your work.

c. (2 points) The probability is .20 that the sample mean value of wages differs from the
true mean value by how much? Show your work.

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Problem 3. A researcher is interested in how the number of houses sold in a large city depends
on the market price of houses and the mortgage rate (which is the interest rate at which people
borrow money to finance house purchases). Using the data for the period from January 2011 to
July 2019, the following OLS estimates are obtained:

PRF: Yt = β0 + β1 Pt + β2 Rt + ut

SRF: Yt = b0 + b1 Pt + b2 Rt + et

OLS SRF estimates: Yt = 950.0 – 53.0 Pt – 80.0 Rt


(40.51) (20.15) (32.03)

R2 = 0.902, S = 0.552, n = 103

where Yt = the number of houses sold (in units)


Pt = the market price of houses (in thousands of $)
Rt = the mortgage rate (in percentage point)

a. (1 point) Interpret the coefficient of determination (R2).


b. (1 point) Interpret the OLS point estimate of β0.
c. (1 point) Interpret the OLS point estimate of β1.
d. (1 point) Interpret the OLS point estimate of β2.
e. (2 points) Find the 90% confidence interval estimate of β1. Show your calculations. Interpret
your results. Using the confidence interval estimates, do you reject the null hypothesis that
β1 = 0? If so, at what level of significance? Explain clearly.
f. (2 points) Test to see if the mortgage rate (Rt) explains the behavior of houses sold (Yt). In
answering, write out the null and alternative hypotheses and the decision rule. Show your
calculations and state your conclusion.
g. (2 points) Test (at the 5% level of significance) the null hypothesis that the independent
variables jointly do not explain the behavior of the dependent variable. In answering, write
out the null and alternative hypotheses and the decision rule. Show your calculations and
state your conclusion.

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h. (2 points) Calculate the 90% confidence interval estimate of σ2. Show your calculations.
Interpret your result.
i. (1.5 points) It is claimed that the true standard error of regression σ is .50. Use your results in
part (h) to check the validity of this claim. In answering, specify the null and alternative
hypotheses.
j. (1.5 points) Explain why we use the OLS estimation method to estimate the unknown
population parameters ߚ଴ , ߚଵ , and ߚଶ in the PRF. What is the reason that we do not use
other estimation methods?

Problem 4. A random sample of 101 Asian students in the US universities was asked to respond on
a scale from one (strongly disagree) to seven (strongly agree) to the statement: “The quality of
education in US universities is excellent.” For this sample, the mean response was 5.2, and the
standard deviation was 1.2. A random sample of 91 African American students was asked the same
question. For this sample, the mean response was 6.2, and the standard deviation was 1.6.

a. (2 points) Test whether the population mean for Asian students equals the population mean
for African American students against a two-sided alternative. In answering, write the null
and alternative hypotheses and the decision rule. Show your calculations and state your
conclusion.

b. (2 points) Test whether the population variance for Asian students equals the population
variance for African American students (at the 5% level of significance) against a one-
sided alternative. In answering, write the null and alternative hypotheses and the decision
rule. Show your calculations and state your conclusion.

c. (1 point) State the assumption(s) that are needed for your answer to part (b) to be valid.

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Formula sheet

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