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IIM Nagpur

Analysis of Data 2015

Weekly Assessment 2

Full Marks: 20

Duration: 60 minutes
Instructions:

1. This paper contains 2 questions. Answer both questions for full credit.

2. The assessment is open book and open notes. You can use any calculator.

3. Answer only in the answer script in the space provided. You need to properly justify your answers for full
credit.

4. Use the last page if you need extra space.

5. Please note that using any unfair means, especially copying from others, will be dealt with severely.

Questions:

1. Last year one of the headline news in NDTV was “B-school graduates increasingly prefer public sector jobs”
– it was reported that about 65% of top tier B-school students prefer to work in public sector units (PSU) rather
than private ones. Suppose you are intrigued by this report and want to carry out a survey to gauge the mood of
the IIM students in this matter. Accordingly you selected a random sample of 100 PGP students and asked them
“If given an option, would you prefer to work in a public sector unit rather than a private one?” Suppose 60
responded in the positive. Assume that no finite population correction is needed.

a) [2 marks] Compute and interpret a 95% confidence interval of the true proportion of IIM students who would
prefer to work in a PSU.
b) [2 marks] Suppose, inspired by your survey, your friend undertook a similar survey. However, her sample
size was only 50.

Identify true or false with brief reason: Sample proportion remaining the same as above, her 95% confidence
interval will be narrower than yours.

c) Suppose your friend is not satisfied with the above sample size – in fact, she wants to collect a sample which
would provide her a margin of error 0.03 with a 95% confidence. In doing so, what will be her sample size in
the following cases

(i) [2 Marks] When she uses the estimated sample proportion from part (a) as a reference value in her
computation to obtain the required sample size.
(ii) [2 Marks] When she does not use any value as a reference, but wishes to consider the worst possible
scenario.

e) Suppose your friend’s 95% confidence interval is (0.53, 0.62). For each of the following, identify True/False
with very brief reason (at most one line).

(i) [1 mark] The probability that the true population proportion of IIM students who prefer to work in PSUs is
between 0.53 and 0.62 is 0.95.

(ii) [1 mark] Of a large number of 95% intervals calculated the same way, we expect all of them to contain the
corresponding sample proportion value.
2. A fatal genetic disease in known to affect 1 in every 100 people on the average of an ethnic group in a country.
A blood test after the age of 4 years can be used to determine whether a person is affected by the disease.

The health authorities of the country decided to administer a new vaccine that was proven to be effective in
preventing the disease in a different ethnic group. The vaccine was given to all infants at the age of 6 months
or before of the first mentioned ethnic group.

A random sample of 2000 kids, all aged between 5 to 6 years who were administered the vaccine earlier at the
age of 6 months, were subjected to the blood test mentioned above to determine whether they are affected by
the disease. Assume the formulae we learned is class for SRSWR are applicable.

We want to test whether the vaccine was effective or not.

a) [2 marks] State a set of appropriate null and alternative hypotheses. (Hint: quantify what we should mean
by the vaccine being effective. )

b) [2 Marks] What is a possible problem, other than mathematical, if we switch between the two hypotheses?
Give a brief justification.

c) Suppose you wish to perform the test based on the proportion of kids among the 2000 sampled vaccinated
kids who are going to have that disease.

i) [2 marks] What is the approximate distribution of the test statistic if the null hypothesis were true?
ii) [1 mark] When would you reject the null hypotheses if you were to test the hypotheses at a 5% level of
significance?

d) [3 marks] Suppose it is observed, based on the blood test, that out of the 2000 vaccinated kids sampled, 10
kids are going to have that disease. What is your conclusion regarding the efficacy of vaccination and why?