Question

In: Statistics and Probability

The manufacturer of an MP3 player wanted to know whether a 10% reduction in price is...

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.

Solutions

Expert Solution

Pooled variance = 198.4182

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

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