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STAT6202 Exercises 6

1. The following data are average weekly rents (in pounds) payed by Local Authority tenants and Housing
Association tenants in 1995 for the 11 regions of England, Wales and Scotland (Source: Regional Trends,
1996).

Region Local Authority Housing Association


North 32.54 34.94
Yorkshire and Humberside 26.68 36.75
East Midlands 32.59 40.11
East Anglia 36.79 36.62
Greater London 50.70 46.40
South East (excluding London) 43.74 44.36
South West 39.71 43.66
West Midlands 35.16 39.17
North West 34.64 32.83
Wales 36.00 42.20
Scotland 28.78 29.13

Is there significant evidence that the mean rent payed by Local Authority tenants differs from that paid by
Housing Association tenants? (Use an appropriate significance test, following the procedure of Exercises
5, Question 2b.)
2. A market analyst is investigating the return on capital employed (measured as a percentage of the capital)
in the alcohol and tobacco production industries. The returns on capital for 20 international companies,
12 in alcohol production and 8 in tobacco production yielded the following summary statistics:

Sample size Mean Standard deviation


Alcohol: 12 15.6 4.01
Tobacco: 8 12.3 3.58

(a) What assumptions must be made to test the hypothesis that the mean return on capital employed is
the same in both industries, using a two-sample t-test? What would be the consequences of these
assumptions not holding?
(b) Assuming that these assumptions are satisfied, carry out this test, stating the null and alternative
hypotheses and the approximate P-value obtained (or a range in which it lies). State a short non-
technical conclusion.

3. The following data are the monthly sales over the past month (in pounds, to the nearest ten pounds) by
two groups of salesmen selling fax machines, one group of 8 salesmen had been set a sales target, the
other group of 6 had not.

Target 5020 5100 5950 6090 5310 5480 5730 6000


No target 4520 5010 5500 4850 5200 4930

(a) Is there any significant evidence that salesmen who are set such a target achieve a different mean
sales than those who are not? (Use a two sample t-test.)
(b) Draw a dot plot of the two samples of data, on the same scale. Label your figure informatively and
use it to comment on whether the assumptions of the test in (a) seem reasonable.
(c) Obtain a 95% confidence interval for the difference in mean sales for the two populations. Explain
briefly what the two notional populations are in this example. Interpret the confidence interval.
(d) Is your calculated confidence interval in (c) in line with your conclusion of (b)?

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