ECON1203 Summer School 2014/15 Tutorial Questions

WEEK 1
1. What is meant by a variable in a statistical sense? Distinguish between qualitative and
quantitative statistical variables, and between continuous and discrete variables. Give
examples.
2. Distinguish between (a) a statistical population and a sample; (b) a parameter and a statistic.
Give examples.
3. In order to know the market better, the second-hand car dealership, Anzac Garage, wants to
analyze the age of second-hand cars being sold. A sample of 20 advertisements for passenger
cars is selected from the second-hand car advertising/listing website www.drive.com.au The
ages of the vehicles at time of advertisement are listed below:
5, 5, 6, 14, 6, 2, 6, 4, 5, 9, 4, 10, 11, 2, 3, 7, 6, 6, 24, 11
(a)

(b)

(c)

Calculate frequency, cumulative frequency and relative frequency distributions for the age
data using the following bin classes:
More than 0 to less than or equal to 8 years
More than 8 to less than or equal to 16 years
More than 16 to less than or equal to 24 years.
Sketch a frequency histogram using the calculations in part (a). What can you say about the
distribution of the age of these second-hand cars? Is there anything wrong with the
frequency table and histogram? Specifically, is the choice of bin classes appropriate? What
needs to be done?
Halve the width of the bins (0 to 4, 4 to 8, etc) and recalculate the frequency, cumulative
frequency and relative frequency distributions. Using the new distributions and histogram,
what can you now say about the distribution of the age of second-hand cars?

4. SIA: Health expenditure

A recent report by Access Economics provides a comparison of Australian expenditures on
health with that of comparable OECD countries. Data from that report relating to 2005 have
been used to reproduce their Figure 2.2 (below denoted as Figure 2.1).
(a)
(b)

What are the key features of these data?

While this is a bivariate scatter plot, there are three variables involved: health
expenditure, GDP and population. Why account for population by expressing health
expenditure and GDP in per capita terms?

Health expenditure per capita (US$000)

Figure 2.1 OECD Health Expenditure and

GDP
7
6
5
4

3
2
1
0
0

10

20

30

40

50

60

70

GDP per capita (US$000)

5. Using the car data from Question 3:

(a) Redo Q3(c) using EXCEL to confirm that the frequency histogram is given by Figure 3.1.

Frequency

Figure 3.1: Revised histogram for age

of cars
10
9
8
7
6
5
4
3
2
1
0
2

10

14

18

22

Age

(b) Calculate the mean, median and mode for this sample of data and use them to further
describe the distribution of ages.
(c) Calculate the range, variance, standard deviation.
(d) If the largest observation were removed from this data set, how would the three
measures of central tendency you have calculated change?

6. Calculate the 80th percentile for the following set of data:

-2.4, -1.3, 3.4, 3.5, 4.0, 6.5, 6.7, 7.3, 7.9, 8.5, 9.7, 9.8, 10.5

7. SIA: Sydney housing prices.

Figure 3.2 depicts a scatter plot of Sydney housing prices versus distance from Sydney. The unit
of observation is a suburb, price is the mean of the median price of houses sold in each suburb
for two quarters (September and December 2002) and distance is measured in kilometers from
Sydneys CBD.
(e) What would you expect the correlation to be between price and distance?
(f) Does it appear that there is a linear relationship between the two variables?
(g) What other key features of these data can be determined from the plot?

Figure 3.2: House prices in Sydney suburbs versus distance to

CBD
6000000

5000000

Price $

4000000

3000000

2000000

1000000

0
0

10

20

30

40

50

60

70

80

Distance to CBD (kms)

8. Anzac Garage wants to develop guidelines for setting prices of cars according to the cars age.
They hire a business consultant who chooses a sample of 117 second-hand passenger car
advertisements collected from www.drive.com.au and retrieves data on age and price of the
cars.
(h) The business consultant first calculates the correlation coefficient between age and price
and finds it to be -0.278. Interpret this result.
(i) Sketch what you think the scatter diagram from which it was calculated might look like.
Suppose the business consultant constructs a simple linear regression model using price as
the dependent variable, and age as the independent variable. What do you think the
estimated regression line might look like here? (We will return to this particular example
later in the course and address this question more formally.)