ECON1203

Business and Economics Statistics

Tutorial 2 Problems
Week 3

1. Using the car data from Question 2 in Tutorial 1:

(a)
Calculate the mean, median and mode for this sample of data and use these
statistics to further describe the distribution of car ages.
(b)
If the largest observation were removed from this data set, how would the three
measures of central tendency you have calculated change?
2. For the following statistical population, compute the mean, range, variance and
standard deviation: 3, 3, 5, 12, 13, 14, 17, 20, 21, 21.
What would happen to each of the measures you have calculated if:
(a)
4 were added to each data point (observation)?
(b)

each data point were multiplied by 2?

3. Migrant wealth.
Suppose the Minister for Immigration is interested in research on the assimilation of
migrant households (a household where the chief income-earner is foreign born). The
Household, Income and Labour Dynamics in Australia (HILDA) survey is a
representative survey of Australian households. Using 4,669 household observations
for 2002 from HILDA, we find there are 3,567 households classified as Australianborn and 1,102 classified as migrants. One key consideration is how migrant
households are doing in terms of wealth compared with Australian-born households.
Using these data, we find the following:
Summary statistics for net household wealth ($A)
Australian-born

Mean
236,064

10th percentile
1,545

Median
123,020

90th percentile
560,006

Migrant

248,970

1,720

131,152

524,372

(a) What can you say about the distribution of net household wealth, for both
Australian-born and migrant households, by looking at just the mean and the median
figures?
(b) More generally, what can you say about the distribution of wealth for migrant
households compared to that for Australian-born households? In particular, which
type of household has greater variation in wealth?
(c) Suppose the minister has net household wealth of $600,000. What can you say
about his or her financial circumstances relative to other Australian-born households?
4. Sydney housing prices.
Figure 3.2 depicts a scatter plot of Sydney-area housing prices versus distance from
the CBD. The unit of observation is a suburb, price is the mean of the median price of
houses sold in each suburb for two quarters (those ending in September and
December 2002), and distance is measured in kilometers from downtown.
(a) What would you expect the correlation to be between price and distance?
(b) Does it appear that there is a linear relationship between the two variables?
(c) 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)

5. 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
the age and price of the cars.

(a) The business consultant first calculates the correlation coefficient between age
and price and finds it to be -0.278. Interpret this result.
(b) Sketch what you think the scatter diagram from which this correlation coefficient
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.)
6. Work through problem 33 on page 164 of Sharpe (Chapter 4).