Question

# In what follows use any of the following tests/procedures: Regression, multiple regression, confidence intervals, one sided...

In what follows use any of the following tests/procedures: Regression, multiple regression, confidence intervals, one sided T-test or two sided T-test. All the procedures should be done with 5% P-value or 95% confidence interval.Some answers are approximated, choose the most appropriate answer. Open Wages data. SETUP: Is it true that more educated people have higher wages? Given the data your job is to confirm or disprove this assertion.

I. What test/procedure did you perform? (6.66 points)

• a. One sided T-test
• b. Two sided T-test
• c. Regression
• d. Confidence interval

II. Statistical interpretation? (6.66 points)

• a. Since P-value is small we are confident that the slope is not zero.
• b. Since P-value is small we are confident that the averages are different.
• c. Since P-value is too large the test is inconclusive.
• d. None of these.

III. Conclusion? (6.66 points)

• a. Yes, we can confirm the assertion.
• b. No, we cannot confirm the assertion.

EDUCATION: Number of years of education.SOUTH: Indicator variable for Southern Region (1=Person lives in SEX: Indicator variable for sex (1=Female 0=Male).EXPERIENCE: Number of years of work experience.UNION: Indicator variable for union membership (1=Union member AGE: Age (years).RACE: Race (1=Other 2=Hispanic 3=White).WAGE: Wage (dollars per hour).OCCUPATION: Occupational category (1=Management SECTOR: Sector (0=Other 1=Manufacturing 2=Construction).MARR: Marital Status (0=Unmarried  1=Married)

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I)

Ans a. Ones-sided t-test.

Since it is right-tail test [ Null hypothesis H0: average mpg=3500 vs alternative hypothesis H1:average mpg>3500]

II)

Test of mu = 3500 vs > 3500

95% Lower
Variable N Mean Std.Dev SE Mean Bound T P
Cadillac 11 3984.0 300.2 90.5 3819.9 5.35   0.000

Due to small margin of error we are confident that the average mpg is above 3500.

Since p-value=0.000<0.05, we conclude that the average mpg is above 3500.

III).

a. Yes, we can confirm the assertion. [Since p-value = 0.000<0.05]