Economics 310 Menzie D. Chinn
Fall 2003 Social Sciences 7418
University of Wisconsin-Madison
Midterm Exam 1
Answer all questions in your bluebook. Make certain you write your name, your student
ID number, and your TA’s name on your bluebook.
Point allocations are proportional to time allocations.
Be sure to show your work; partial credit will be awarded.
1. (8 minutes) The customer service department of a large company monitors the
incoming phone calls to determine how long a customer must wait on hold before
receiving the assistance they need. The company claims that the average time on
hold is 2 minutes and the standard deviation is .6 minutes. Would you expect to
wait on hold for more than 5 minutes when calling the customer service
department described above? Explain.
2. (8 minutes) The University Book Store received a late shipment of 25 statistics
books from the publisher. Packaged with each of the books is a copy of the
statistical software that is being used in the statistics classes. Unknown to the
book store is that five of the disks shipped contained an error that will not allow
the student access to the software. Suppose you and your friend both purchase
books from the late shipment of 25. Find the probability that at least one of your
disks contains the error.
3. (8 minutes) A local newspaper claims that 60% of the items advertised in its
classified advertisement section are sold within 1 week of the first appearance of
the ad. To check the validity of the claim, the newspaper randomly selected n =
25 advertisements from last year's classified advertisements and contacted the
people who placed the ads. They found that x = 13 of the 25 items sold within a
week. Based on this claim, is it likely to observe x ≤ 13 who sold their item within
a week?
4. (8 minutes) A small life insurance company has determined that the variance of
the death claims it receives is 5 per day. Find the probability that the company
receives more than seven death claims on a randomly selected day, assuming the
process follows one of the discrete random variables discussed in class.
5. (8 minutes) In a certain community, 36 percent of the families own a dog, and 22
percent of the families that own a dog also own a cat. In addition, 30 percent of
the families own a cat. What is the conditional probability that a randomly
selected family owns a dog given that it owns a cat?
