Question

The Progressive Conservatives claim the average of 750 thousands per year (as the expected value for the earnings among Ontario super-rich) is an exaggeration, and have bet the NDP leader that the average annual earnings (per person) obtained from a sample of 1200 super-rich will be less than 748 thousands per year.

4. Assume that the NDP assumptions were correct.

(a) Will the NDP win this bet (yes/no, and why)?

(b) What is the probability that the NDP will win the bet?

(c) Would your answer change if the sample size were doubled?

Answer 1

a)

If the NDP assumption that average annual earnings (per person) obtained from a sample of 1200 super-rich will be less than 748 thousands per year, it doesn't let them win the bet as they are just talking about 1200 super-rich persons. It can be just the part of the population.

To win the bet, we need to get the whole population.

b)

The probability that NDP will win the bet depends on the fact that how much money do they super-rich people have.

c)

If te sample size is doubled, still we can not be sure if it is the whole population. So, the answer is not going to change.