WESLEYAN UNIVERSITY Michael S. Hanson
Department of Economics

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Economics 300: Excel Assignment for Problem Set #8
  1. The Power Curve for Two-sided Alternative Hypotheses

    You should complete this assignment using Excel.

    1. Using the data on heights we collected from the class, calculate and plot the power curve for the mean height of all students (males and females together). Suppose the null hypothesis for the population mean is your personal height in inches. (Recall, everyone self-reported their height at the beginning of the semester.) The range of alternative hypotheses should match the range of the actual data we collected. Use alpha = 5% as the level of significance (two-sided). Work under the assumption that the height data is not distributed normally and that the variance is unknown.

      Steps: (Print out one page with the answers to all the steps below, and a second page with the requested graph.)

      1. Calculate the standard error of the mean for our sample data.
      2. Calculate the lower and upper end points of the acceptance region (in inches) under the null hypothesis. (Hint: consider the NORMINV function in Excel.)
      3. Let your alternative hypothesis be that the average height of the class is some other height in the range of the class. Find the probability under this particular alternative hypothesis that the sample mean will lie below the numerical value of the lower end point identified above. (Hint: consider the NORMDIST function.)
      4. Find the probability under the same alternative hypothesis that the sample mean will lie above the numerical value of the upper end point identified above. (Note: the NORMDIST function gives a left-hand tail only.)
      5. What is the power of the test for this particular alternative? (Hint: it should be a function of the answers to (3) and (4) above.)
      6. Repeat (3) - (5) for all the possible alternative hypotheses that lie in the range of our original data. Display your results, clearly and concisely, as a table. (Hint: Use one-inch increments, from the minimum to the maximum height for the class. If you set up the previous steps appropriately, all you should need to do is cut and paste a few formulas to create this table.)
      7. Plot the points of the power curve you have calculated in (6) as a line graph.
      8. Choose five student heights at random (with replacement): list them and calculate a sample mean. Does that sample mean lie within the 95% confidence interval implied by your end points in (2)? Calculate the two-sided p-value for your sample mean.

    2. Repeat steps (1) - (7) above for a sample size of five, rather than the full class as above. Use the sample mean you computed in (8) above as the value for the population mean under the null hypothesis. Notice that the only statistical difference between this question and the one above concerns the shape of the distribution. (Hint: with some judicious design of the spreadsheet used to answer part (A), you can simply copy and paste the above results, make a few small changes, and get the desired answers for (B).) Then:

      1. Choose at random (with replacement) a second group of five student's heights: list them and calculate this sample's mean. Does this sample mean height lie within the 95% confidence interval you have computed for this question? Calculate the two-sided p-value for this sample mean height under your null hypothesis.

      (Print out a third page with the answers to all the steps of part (B), and a fourth with the graph of the power curve for (B).)

    3. Compare the power curves (power functions) computed in questions (A) and (B) above.

      1. What is the maximum value of the power function for (A)? What is the maximum value of the power function for (B)? Explain why each obtains the maximum value you computed.
      2. What is the minimum value of the power function for (A)? What is the minimum value of the power function for (B)? Explain why each obtains the minimum value you computed.

      (Print out a fifth page with the answers to these questions.)


    Data files for these questions:

    The raw data for this problem is available as an Excel file; click on the link to download. (Ask a lab consultant if you need help.)

Submitting this assignment for credit:
In order to receive credit for this assignment, you must also e-mail to me your Excel spreadsheet as an attachment. Please name the Excel file as your e-mail name -- e.g. mshanson.xls -- and include your name in a cell of the worksheet as well.



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Created: Thursday, April 4, 2002
Updated: Sunday, April 7, 2002
Version: 1.0.3a

Copyright ©1999 - 2002, Michael Steven Hanson