Question

The manufacturer of an MP3 player wanted to know whether a 10% reduction in price is enough to increase the sales of its product. To investigate, the owner randomly selected eight outlets and sold the MP3 player at the reduced price. At seven randomly selected outlets, the MP3 player was sold at the regular price. Reported below is the number of units sold last month at the regular and reduced prices at the randomly selected outlets.

Regular price	133	125	88	118	120	121	95
Reduced price	121	132	154	133	115	123	133	133

At the 0.050 significance level, can the manufacturer conclude that the price reduction resulted in an increase in sales? Hint: For the calculations, assume reduced price as the first sample.

1. Compute the pooled estimate of the variance.

2. Compute the test statistic.

3. State your decision about the null hypothesis.

Answer 1

Pooled variance = 198.4182

Therefore, the claim is false that the price reduction resulted in an increase in sales.

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