Question

If you were going to buy a used car, would you pay a different amount for the car if you were buying it from a friend as opposed to a stranger?  To answer this question, statisticians selected a random sample of 20 people who purchased a used car from a friend; this sample had a mean car price of $6578.39.  A separate random sample was also collected from 24 people who purchased a used car from a stranger; this sample had a mean car price of $7074.89.  The data values are plotted here, and the two sample means are plotted as large black dots.  These means and their associated standard deviations can be found in the table below.

Table of Sample Statistics:

Sample	Mean	St. Dev.
Stranger	7074.89	966.33
Friend	6578.39	783.88

  

Research Question: Does this provide convincing evidence that the average price people pay friends for used cars differs from the average price people pay strangers?  

1. What are the twoparameters of interest?  Use correct notationfor each parameter and describe eachparameter in context using a short sentence. (4 points)

2. Using the problem description at the top of the page, give the null and alternative hypotheses.  Hint: these hypotheses will use the notationfrom your answer in part A. (3 points)

H₀:

H_a:

C. Calculate the appropriate test statistic.  Show all supporting work. (4 points)

Answer 1

Solution:

Sample1 : Stranger data

Sample 2: Friend data

Done