Introductory Econometrics: A Modern Approach 6th Edition by Jeffrey M Wooldridge

Exercise 9

Suppose that a military dictator in an unnamed country holds a plebiscite (a yes/no vote of confidence) and claims that he was supported by 65% of the voters. A human rights group suspects foul play and hires you to test the validity of the dictator’s claim. You have a budget that allows you to randomly sample 200 voters from the country.

(i) Let X be the number of yes votes obtained from a random sample of 200 out of the entire voting population. What is the expected value of X if, in fact, 65% of all voters supported the dictator?

(ii) What is the standard deviation of X, again assuming that the true fraction voting yes in the plebiscite is .65?

(iii) Now, you collect your sample of 200, and you find that 115 people actually voted yes. Use the CLT to approximate the probability that you would find 115 or fewer yes votes from a random sample of 200 if, in fact, 65% of the entire population voted yes.

(iv) How would you explain the relevance of the number in part (iii) to someone who does not have training in statistics?

Step 1 of 4

If the outcome is either success or failure, with some number of observation then this denotes a Binomial distribution.

(i) The mean or expected value of binomial distribution is the probability of success (p) multiplied by number of observation (n). Here total number of observation is 200 and the success rate is 65% or 0.65:

The expected value or mean is 130.