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Exercise_4

Solution of mathematics.

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Valuer Khayourday Orllarwhalesky
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5 views2 pages

Exercise_4

Solution of mathematics.

Uploaded by

Valuer Khayourday Orllarwhalesky
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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ConREM Master Programme

HTW Berlin / Metropolia University of Applied Sciences


Advanced Mathematical Methods in Economics and Management

Exercise 4

Reporting: Please submit your report to the Oma workspace of


the course by Monday 21.10.

1. Calculate the sample mean and sample standard deviation in sample

4.5 5.6 4.0 3.3 3.9 5.1 6.0

a) With pen, paper and calculator, using the formulas in file


Introduction_to_Estimation.pdf.
b) Using Excel commands AVERAGE and STDEV.S. Check that the results are
the same as in point a.

2. In a sample of 200 employees, working in a certain occupation, the mean of the


monthly salaries was 3750 €. The standard deviation is supposed to be 700 € (the
standard deviation of the salary distribution in the whole population, not in the sample).

a) Determine 90% and 95% confidence intervals for the average salary. Use pen,
paper, calculator, standard normal tables and the principle introduced in file
Determining CI for mean.pdf, in the course workspace.

b) Solve the same problem using Excel command CONFIDENCE.NORM.

c) As point b, but supposing that 700 € is the sample standard deviation, and the
population standard deviation is unknown. You must replace
CONFIDENCE.NORM by CONFIDENCE.T. How the results were changed, if
compared to point b?

3. A company analyzed times needed to complete a certain type of project. Time was
supposed to be normally distributed. The following sample was obtained (time in
months) :
2.5 4.7 3.5 9.5 5.0 5.5 4.0 5.8 5.0 3.5 6.5 6.0 3.6

a) Using Excel, determine the 95% confidence interval for the average project
duration. Consider yourself what are the proper Excel functions to be used.

b) By using the best estimates for the mean and the standard deviation (=sample
mean and sample standard deviation), determine the duration exceeded only with
probability of 2%. Excel command NORM.INV can be used. Do the same also in
“the worst case scenario”: using the upper limit of the 95% confidence interval as
an estimate for the mean (the standard deviation being still the sample standard
deviation).

Understand that there’s a big difference if the actual mean of the distribution
exceeds a certain limit or if single value of the random variable exceeds a certain
limit!
c) Let’s analyze possibilities to complete a project very quickly. If using the best
estimates for the mean and the standard deviation, what is the probability that only
1 month is needed to finish a project? Determine also limit H such as there’s
probability of only 0.1% that duration of a project is less than H. What do you think
about rationality of the results?

4. Let 𝑋 be normally distributed random variable with mean 200 and standard deviation
30. In points a-c, determine the probabilities and the limit asked in point d, without
Excel, using standard normal table (and calculator when needed).

a) 𝑃(𝑋 ≤ 175) b) 𝑃(𝑋 ≥ 190) c) 𝑃(180 ≤ 𝑋 ≤ 240)

d) What is the limit 𝑤 such as 𝑃(𝑋 ≤ 𝑤) = 0.7 ?

e) Check your answers with Excel, using commands NORM.DIST and NORM.INV.

Answers to some questions:

Problem 2

a, b) 95% confidence interval is [3653 € , 3847 €], the margin of error being 97 €.
For confidence level 90% the interval is [3668 €, 3832 €] and the margin of error is 81 €.

c) Margin of errors are slightly larger, 98 € and 82 € (by accuracy of 1 €).

Problem 3

a) 95% confidence interval is [3.9 , 6.1] (unit is month).

b) The critical limits for durations, calculated in two different ways, are 8.7 months and 9.8
months.

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