1. In the following regression, “drink” is a dummy indicating a person drinks alcohol, “smoke” is a dummy indicating a person smokes cigarettes, and “drink*smoke” is the interaction of the two variables:

Medical Bill=1+2 drink+3 smoke+4 drink*smoke+other

a) How much is the difference in medical bill between a person who both drinks and smokes and a person who doesn’t drink but smokes? (10pts)

b) Will you be able to test if this difference is statistically significant if you are given all the standard errors? Say “yes” or ‘no”, then explain. (10pts)

2. In the following regression, “drive” is a dummy indicating a person owns a personal vehicle, “employed” is a dummy indicating a person is employed, “age” is a person’s age, and “married” is a dummy indicating a person is married:

drive=0.3+0.2 employed+0.003 age+0.4 married

The command in STATA is: reg drive employed age married

a) Interpret the coefficient 0.2 on employed. (10pts)

b) Predict the probability of owning a vehicle for a person who is employed, 60 years of age and married. (10pts)

c) The answer you got from the previous question is actually greater than 1. Explain why that is. (10pts)

d) Will you be able to test the significance of the coefficients if you were given all the standard errors and/or p-values? Say “yes” or ‘no”, then explain. (10pts)

3. Elaborate, in your own words, the difference between conducting the standard White test and the special case of the White test. (5pts)

60 % of the chips used by a computer manufacturing company (CMC) are provided by supplier A and the rest by supplier B. The two suppliers have the following faulty chip rates: 0.3% for supplier A and 0.8% for supplier B. Consider a random batch of 20 chips (chips cannot be distinguished by supplier). a. Show that the expected number of faulty chips is 0.1. [15 marks] b. What is the probability of having two or more faulty chips? Justify your answer and the choice of the probability distribution. [15 marks] If the daily production of computer is 1000, and each computer has one chip: c. What is the probability that 8 or more computers do not pass the final quality check due to faulty chips? Justify your approach. [20 marks] The company, CMC, has to decide whether to implement a quality control screening of chips when delivered by the suppliers. In this case, only the chips that pass the screening will be used in the production process. Previous experience of quality control screenings reported that in 95% of the cases it was able to correctly identify faulty chips and in 3% of the cases was giving false negatives (meaning that even though the chip was working correctly the screening identified it as faulty). The screening process will be convenient only if the average number of daily faulty computers will be smaller than 3. d. Should the company implement the quality control screening? [20 marks]

60 % of the chips used by a computer manufacturing company (CMC) are provided by supplier A and the rest by supplier B. The two suppliers have the following faulty chip rates: 0.3% for supplier A and 0.8% for supplier B. Consider a random batch of 20 chips (chips cannot be distinguished by supplier). a. Show that the expected number of faulty chips is 0.1. [15 marks] b. What is the probability of having two or more faulty chips? Justify your answer and the choice of the probability distribution. [15 marks] If the daily production of computer is 1000, and each computer has one chip: c. What is the probability that 8 or more computers do not pass the final quality check due to faulty chips? Justify your approach. [20 marks] The company, CMC, has to decide whether to implement a quality control screening of chips when delivered by the suppliers. In this case, only the chips that pass the screening will be used in the production process. Previous experience of quality control screenings reported that in 95% of the cases it was able to correctly identify faulty chips and in 3% of the cases was giving false negatives (meaning that even though the chip was working correctly the screening identified it as faulty). The screening process will be convenient only if the average number of daily faulty computers will be smaller than 3. d. Should the company implement the quality control screening? [20 marks]

It is 2026 and you are back in your home state, where you work as chief advisor to a state legislator. (Taking PSC 107 made you an expert in legislative matters – it turns out that policymaking is very similar to elections with policy-motivated candidates.) All legislators are policy motivated. This means that an arbitrary legislator i, with ideal point xi, gets utility ?|x?xi| if policy x is approved. Your boss, a moderate legislator with ideal point xB = 0.3, asks for your advice before introducing a bill to replace the status quo policy q = 0.75. If she introduces the bill, it will be sent to a committee, where the members of the committee will vote to decide whether or not the bill is sent to the floor of the state House. For simplicity, we assume that if a bill is sent to the floor it is automatically approved and becomes the new policy.

Currently, the committee is controlled by your boss’ party. The median member of the committee has ideal point xM = 0.6. What is the winset of the status quo q? In other words, what policies is the median committee member willing to approve in order to replace the status quo policy q? (Assume the median approves any policy that gives her at least the same utility as the status quo policy q). (3 points)

(b) What policy should your boss propose? (2 points)

Port Inc. is preparing its annual budgets for the year ending December 31, 2018. Accounting assistants furnish the data shown below.

An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling, general and administrative expenses: variable 5% of sales, fixed $100,000 for product A and B.

Required: (support your answers with an explanation)

1. Prepare the following budgets for the year. Show data for each product. You do not need to pre- pare quarterly budgets.

1. Sales
2. Production
3. Direct materials
4. Direct labor
5. Income statement

2. What are the primary benefits of budgeting?

3. How does a budget add to good organization?

1A . Pargo Company is preparing its master budget for 2017. Relevant data pertaining to its sales, production, and direct materials budgets are as follows.

Sales:Sales for the year are expected to total 1,000,000 units. Quarterly sales are 20%, 25%,25%,and 30% respectively.The sales price is expected to be $40 per unit for the first three quartersand $45 per unit beginning in the fourth quarter.Sales in the first quarter of 2018 are expected to be 20% higher than the budgeted sales for the first quarter of 2017.

Production:Management desires to maintain the ending finished goods inventories at 25% of the next quarter’s budgeted sales volume.

Direct materials:Each unit requires 2 pounds of raw materials at a cost of $12 per pound.Management desires to maintain raw materials inventories at 10% of the next quarter’s production requirements.Assume the production requirements for first quarter of 2018 are 450,000 pounds.

a) Prepare the sales, production, and direct materials budgets by quarters for 2017.

1B. Preparing its budgeted income statement for 2017 ( Using data from answer 1)

In addition, Pargo budgets 0.3 hours of direct labor per unit, labor costs at $15 per hour, and manufacturing overhead at $20 per direct labor hour. Its budgeted selling and administrative expenses for 2017 are $6,000,000.

a) Calculate the budgeted total unit cost

b) Prepare the budgeted multiple-step income statement for 2017. (Ignore income taxes)

You are conducting a Goodness of Fit hypothesis test for the claim that the 4 categories occur with the following frequencies:

H0H0 : pA=0.15pA=0.15; pB=0.3pB=0.3; pC=0.15pC=0.15; pD=0.4pD=0.4

Give all answers as decimals rounded to 3 places after the decimal point, if necessary.

Complete the table:

What is the chi-square test-statistic for this data?
Test Statistic: χ2=χ2=

For a significance of level alpha = 0.005, what is the chi-square critical value?

You are conducting a multinomial hypothesis test (αα = 0.05) for the claim that all 5 categories are equally likely to be selected. Complete the table.

Report all answers accurate to three decimal places. But retain unrounded numbers for future calculations.

What is the chi-square test-statistic for this data? (Report answer accurate to three decimal places, and remember to use the unrounded Pearson residuals in your calculations.)
χ2=χ2=

What are the degrees of freedom for this test?
d.f.=

What is the p-value for this sample? (Report answer accurate to four decimal places.)
p-value =

Critical Value: χ2=χ2=

Greeson Clothes Company produced 23,000 units during June of the current year. The Cutting Department used 4,400 direct labor hours at an actual rate of $13.2 per hour. The Sewing Department used 7,300 direct labor hours at an actual rate of $12.9 per hour. Assume there were no work in process inventories in either department at the beginning or end of the month. The standard labor rate is $13.1. The standard labor time for the Cutting and Sewing departments is 0.2 hour and 0.3 hour per unit, respectively.

a. Determine the direct labor rate, direct labor time, and total direct labor cost variance for the (1) Cutting Department and (2) Sewing Department.. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

b. The two departments have opposite results. The Cutting Department has a(n) unfavorable  rate and a(n) favorable  time variance, resulting in a total favorable  cost variance. In contrast, the Sewing Department has a(n) favorable  rate variance but has a(n) unfavorable  time variance, resulting in a total unfavorable  cost variance.

M.E. is a 29-year-old woman with a 7-month history of heavy, irregular menses, a 5-lb weight gain, constipation, and decreased energy. Her past history is unremarkable. She takes no prescription medications but uses iron and calcium supplements. She has a family history of thyroid disease. On examination, her weight is 152 lbs, her heart rate is 64 bpm, and her blood pressure is 138/86. Her thyroid gland is mildly enlarged, without nodularity. She has trace edema in her lower extremities, and her reflexes are slow. Laboratory studies are as follows: TSH is 15.3 mIU/mL (elevated), free T4 is 0.3 mIU/mL, and total cholesterol is 276 mg/mL.

Diagnosis: Primary hypothyroidism Answer the following questions. Include two references, cited in APA style.

List specific goals of treatment for M.E. What drug therapy would you prescribe? Why?

What are the parameters for monitoring the success of the therapy?

Discuss specific patient education based on the prescribed therapy.

List one or two adverse reactions for the selected agent that would cause you to change therapy.

What would be the choice for second-line therapy?

What over-the-counter and/or alternative medications would be appropriate for M.E.?

What lifestyle changes would you recommend to M.E.?

Describe one or two drug–drug or drug–food interactions for the selected agent.

M.E. is a 29-year-old woman with a 7-month history of heavy, irregular menses, a 5-lb weight gain, constipation, and decreased energy. Her past history is unremarkable. She takes no prescription medications but uses iron and calcium supplements. She has a family history of thyroid disease. On examination, her weight is 152 lbs, her heart rate is 64 bpm, and her blood pressure is 138/86. Her thyroid gland is mildly enlarged, without nodularity. She has trace edema in her lower extremities, and her reflexes are slow. Laboratory studies are as follows: TSH is 15.3 mIU/mL (elevated), free T4 is 0.3 mIU/mL, and total cholesterol is 276 mg/mL.

Diagnosis: Primary hypothyroidism

Answer the following questions. Include two references, cited in APA style.

List specific goals of treatment for M.E.

What drug therapy would you prescribe? Why?

What are the parameters for monitoring the success of the therapy?

Discuss specific patient education based on the prescribed therapy.

List one or two adverse reactions for the selected agent that would cause you to change therapy.

What would be the choice for second-line therapy?

What over-the-counter and/or alternative medications would be appropriate for M.E.?

What lifestyle changes would you recommend to M.E.?

Describe one or two drug–drug or drug–food interactions for the selected agent.