Suppose that authorities wish to know the unemployment rate, Ru in a small town.

Question

Suppose that authorities wish to know the unemployment rate, Ru in a small town. Furthermore, suppose that to determine Ru they decide to interview everyone of the 10,000 people in the town's work force.

Fianlly suppose that 4% or 400 0f the work force is unemployed. Unfortunately, not all 10,000 people will be interviewed; some will be out at work, on vacation, and so on. If 90% of the people who are employed and 95% of those who are unemployed are interviewd, calculate ne the number of employed people who are actually counted and nu the same number for those who are unemployed.

Next calculate the observed unemployement rate ru =100nu / (nu+ne). Discuss this obseved rate, ru in coparison with the true rate Ru = 4.00%. For example, why is the observed rate of unemployment too high??

Explanation / Answer

Number of employed counted, ne = 9600*0.9=8640

Number of unemployed counted=0.95*400=380

Observed unemploment rate=380/[380+9640]=3.79%

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.