Question

An economist is interested in whether the level of the minimum wage affects employment. In order to study this issue they got data from a random sample of 322 New Jersey fast food restaurants before and after an increase in the NJ minimum wage from $4.25 to $5.05 per hour. The change in full time equivalent employees per restaurant in the sample before and after the increase was 0.80 with a variance of 77.5. Must not be done using excel.

1. Test whether this suggests the increase in the minimum wage had an effect on employment.
2. What statistical errors might have been made?
3. Why might this not answer the question?

Answer 1

i have used the t test as the population variance is not given in the question

only sample variance is given

but t test is performed only when n<30  

in this case n is very large n=322

so we can perform Z test for large samples assuming that we know the population variance

so there will be 2 types of errors i.e 1. error due to which type of tests we are using

2.error error due to change in the value of n

all the calculations are given in the images