Question

A medical survey in 1990 indicated that 43% of Australian adults prefer to take a name brand prescription drug than pay less for the generic equivalent. A pharmaceutical company believes that with the financial crisis, the percentage of Australian adults willing to take a cheaper generic drug may have risen. The research department conducted a study where a random sample of Australian adults were asked whether or not they would accept a cheaper generic prescription drug.

1) What type of hypothesis test would be appropriate to investigate the pharmaceutical company’s prediction

2) What is the population we can draw conclusions about in this study?

3) The appropriate hypothesis test was conducted and a p-value of .143 was obtained. Based on the results of this study, the pharmaceutical company concludes that the percentage of Australian adults willing to take a cheaper generic prescription drug has remained steady at 43%. Comment on the validity of this conclusion. Provide justification for your answer.

Answer 1

43% of Australians prefer name brand prescription drug

=> 57% prefer Generic drugs

Let p = proportion that prefer Generic drugs

p = 0.57

1) Here, we conduct the hypothesis test for a single proportion using Z-standard normal distribution

The null and alternative hypothesis are

Ho : p = 0.57

Ha : p > 0.57

2) The population consists of all the Australian adults. Conclusions will be relevant to the population of all Australian adults.

3) p-value = 0.143

We assume 5% level of significance

that is

0.143 > 0.05

that is

Hence Ho is not rejected.

Thus p = 0.57 is still valid

Thus percentage of Australian adults willing to take cheaper generic drug has remained steady at 57%

Note to student : In the third question 43% should be 57% because the problem statement says 43% of Australian adults prefer to take a name brand prescription drug than pay less for the generic equivalent