Question

In: Statistics and Probability

Advertising expenses are a significant component of the cost of goods sold. Listed below is a...

Advertising expenses are a significant component of the cost of goods sold. Listed below is a frequency distribution showing the advertising expenditures for 71 manufacturing companies located in the Southwest. The mean expense is $50.28 million and the standard deviation is $11.46 million. Is it reasonable to conclude the sample data are from a population that follows a normal probability distribution?

Advertising Expense ($Million)                          Number of Companies

25 up to 35                                                                 8

35 up to 45                                                                 12

45 up to 55                                                                    30

55 up to 65                                                                    12

65 up to 75                                                                     9

Total                                                                                 71

A.) State the decision rule. Use the 0.10 significance level. (round 2 decimal places)

H0: The population of advertising expenses follows a normal distribution

H1: The population of advertising expenses does not follow a normal distribution

B.) Compute the value of the chi-square. (round 2 decimal places)

Solutions

Expert Solution

Solution:

A.) State the decision rule. Use the 0.10 significance level.

Answer: The decision rule is:

Where:

7.78 is the critical value at 0.10 significance level for degrees of freedom = n-1=5-1=4

The null and alternative hypotheses are:

H0: The population of advertising expenses follows a normal distribution

H1: The population of advertising expenses does not follow a normal distribution

B.) Compute the value of the chi-square.

Answer:

orchestra answered 2 years ago
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