Question

The Wall Street Journal reported that the age at first startup for 55% of entrepreneurs was 29

Sampling distributions
ANSWERED
asked 2021-01-10

The Wall Street Journal reported that the age at first startup for \(55\%\) of entrepreneurs was 29 years of age or less and the age at first startup for \(45\%\) of entrepreneurs was 30 years of age or more.
a. Suppose a sample of 200 entrepreneurs will be taken to learn about the most important qualities of entrepreneurs. Show the sampling distribution of \(\overline{p}\) where \(\overline{p}\) is the sample proportion of entrepreneurs whose first startup was at 29 years of age or less.
b. Suppose a sample of 200 entrepreneurs will be taken to learn about the most important qualities of entrepreneurs. Show the sampling distribution of \(\overline{p}\) where \(\overline{p}\) is now the sample proportion of entrepreneurs whose first startup was at 30 years of age or more.
c. Are the standard errors of the sampling distributions different in parts (a) and (b)?

Expert Answers (1)

2021-01-11
It is given that the proportion of entrepreneurs whose first startup was at 29 years or less is \(p = 0.55\) and the sample size \(n = 200\)
The sampling distribution of the proportion is approximately normal if \(np \Rightarrow 5\ and\ n(1 — p) \Rightarrow 5\).
Verify the conditions:
\(np = 200 \times 0.55\)
\(= 110\Rightarrow 5\)
\(n(1 — p) = 200 \times (1 — 0.55)\)
And
\(=90 \Rightarrow 5\)
The conditions are satisfied. Therefore, the sampling distribution of the proportion is normal.
The mean of the \(\overline{p}\ is\ E(\overline{p})) = p\) and standard deviation of \(\overline{p}\ is\ \sigma_{\overline{p}} = \sqrt{p(1-p)}/n\)
In this context, bar p is the sample proportion of entrepreneurs whose first startup was at 29 years or less
The mean of \(\overline{p}\) is
\(E \overline{p})=p= 0.55\)
The standard deviation of \(\overline{p}\) is
\(\sigma_{p} = \frac{\sqrt{p(1-p)}}{n}=\frac{\sqrt{0.55\times 0.45}}{200}= 0.0352\)
Thus, the sampling distribution of the proportion \(\overline{p}\) proportion of entrepreneurs whose first startup was at 29 years or less is normal with mean \(E(\overline{p}) = 0.55\) and standard deviation \(\sigma_{p} = 0.0352\)
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