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Review 1 Economics 204 Statistics ‘Dr. Martin Spring 2000 ‘You have 50 minutes for this review. Please allocate your time appropriately. If you don’t know the answer to one part of a question but you need the answer to work a subsequent part, then choose a value to use so that you can demonstrate your abitities on that subsequent part. Simply write that you are assuming an answer to the part that you couldn’t solve. To receive full credit for an answer, you must show your work, A correct final number without an adequate demonstration of the steps leading to that number is not worth full credit. You might receive partial credit for an incorrect or an incomplete answer if you show your work or an appropriate diagram. Also, I can’t grade an answer on what you intended to write; I can grade an answer only on what you actually write, Tum in your formula sheet with your review. Please write your name, the complete honor pledge, and sign the pledge. Primed mame: fx y Honor pledge: Signature: The review is worth 100 points, distributed as follows: 15 points 5 points .30 points 30 points Question 1 (15 points total; each part is worth 5 points) a, Prove that the expected value of the deviation from the mean equals zero.” E Ex-ey] = 2 late) Be) = Sahin) ~ Fay he) F Ate — My SE Bln) = Ay way b4) =O b. Clearly explain why the mean and variance for a population of grouped data are calculated as approximations. Z ted of he achal chcte vetoes, Mye 2i fe wwe pe The michoort fon tock ches “ anol The Baagverey T° TEA else, ne for = A) fp Gs FO c. Assume that you have eaiculated the expected monetary value of two actions. A and B. to be: 100 and, Neither A nor 8 is dominated by the other action. The three relevant states of nature are “Federal Reserve raises interest rates”, “Federal Reserve leaves interest rates constant”. and “Federal Reserve lowers interest rates". Clearly explain why the expected value of pertect information about which state of nature wilt occur will be less than the $40 difference between the two expected monetary values. Eotormcten has valve only Ff enurer yer To ehange. gour aeeitin, G1 Hod hroTrons, pu wilh hea Bho, AD Even wif pected homitton, you would GM chown Retin Bois at beast one. Stet of néfore.. So, tor Ta CPhapen} TAG) of nitore, The pohermetos has no valenn 
