In: Statistics and Probability
A professor in the School of Business wants to investigate the prices of new textbooks in the campus bookstore and the Internet. The professor randomly chooses the required texts for 12 business school courses and compares the prices in the two stores. The results are as follows:
Book |
Campus Store |
Internet Price |
1 |
$55.00 |
$50.95 |
2 |
47.50 |
45.75 |
3 |
50.50 |
50.95 |
4 |
38.95 |
38.50 |
5 |
58.70 |
56.25 |
6 |
49.90 |
45.95 |
7 |
39.95 |
40.25 |
8 |
41.50 |
39.95 |
9 |
42.25 |
43.00 |
10 |
44.95 |
42.25 |
11 |
45.95 |
44.00 |
12 |
56.95 |
55.60 |
H1:
(2)
(3)
(4)
H1:
p-value:
(2)
(3)
(4)
a) At the .01 level of significance, there is no evidence of a difference in the average price of business textbooks between the campus store and the Internet
b) H0: There is no singnificance difference in the average price of business textbooks between the campus store and the Internet (= 0)
H1: There is singnificance difference in the average price of business textbooks between the campus store and the Internet ( ≠ 0)
Book | Campus Store | Internet Price |
1 | 55 | 50.95 |
2 | 47.5 | 45.75 |
3 | 50.5 | 50.95 |
4 | 38.95 | 38.5 |
5 | 58.7 | 56.25 |
6 | 49.9 | 45.95 |
7 | 39.95 | 40.25 |
8 | 41.5 | 39.95 |
9 | 42.25 | 43 |
10 | 44.95 | 42.25 |
11 | 45.95 | 44 |
12 | 56.95 | 55.6 |
3 Analysis:
Mean | 47.68 | 46.12 |
Sd | 6.66 | 6.02 |
Level of Significance | 0.01 | |
We will use two sample t test |
t-Test: Two-Sample Assuming Equal Variances | ||
Campus Store | Internet Price | |
Mean | 47.675 | 46.11666667 |
Variance | 44.35977273 | 36.28242424 |
Observations | 12 | 12 |
Pooled Variance | 40.32109848 | |
Hypothesized Mean Difference | 0 | |
df | 22 | |
t Stat | 0.601131946 | |
P(T<=t) one-tail | 0.276948024 | |
t Critical one-tail | 2.508324553 | |
P(T<=t) two-tail | 0.553896047 | |
t Critical two-tail | 2.818756061 |
Since p value is > level of significance we fail to reject the null hypothesis and conclude that there is no singnificance difference in the average price of business textbooks between the campus store and the Internet
a) What assumptions are necessary to perform this test?
We assume equal variance in the population of both the prices.
Find the p-value in (a)? Using the p-value, Is there any evidence of a difference in the average price of business textbooks between the campus store and the Internet? Use Excel and the p-value method and alpha = 1%.
The answer for this is shown above in question no b).