Question

Will improving customer service result in higher stock prices for the companies providing the better service? "When a company's satisfaction score has improved over the prior year's results and is above the national average (currently 75.7), studies show its shares have a good chance of outperforming the broad stock market in the long run." The following satisfaction scores of three companies for the 4th quarters of two previous years were obtained from the America Customer Satisfaction Index. Assume that the scores are based on a poll of 56 customers from each company. Because the polling has been done for several years, the standard deviation can be assumed to equal 7 points in each case. Company Year 1 Score Year 2 Score Rite Aid 76 Expedia 76 J.C. Penney 76 a. For Rite Aid, is the increase in the satisfaction score from year 1 to year 2 statistically significant? Use o= .05 and null hypothesis is H, H1-H2 <0. What can you conclude? value (to 2 decimals) p-value (to 4 decimals) The difference - Select your answer - V statistically significant. b. Can you conclude that the year 2 score for Rite Aid is above the national average of 75.72 Use a= .05 and null hypothesis is Ho: 4 75.7. Enter negative value as negative number. % value (to 2 decimals) p-value (to 4 decimals) We - Select your answer that customer service has improved for Rite Aid. C. For Expedia, is the increase from year 1 to year 2 statistically significant? Use a = .05 and null hypothesis is H : H1 - H2 <0. 2 value (to 2 decimals) P-value (to 4 decimals) The difference - Select your answer statistically significant. d. When conducting a hypothesis test with the values given for the standard deviation, sample size, and a, how large must the increase from Year 1 to Year 2 be for it to be statistically significant? (to 2 decimals) e. Use the result of part (d) to state whether the increase for J.C. Penney from year 1 to year 2 is statistically significant. The increase - Select your answer statistically significant.

Answer 1

a)

z value =	(x1-x2)/sqrt(σ12/n1+σ22/n2)=			1.51 (please try -1.51 if this comes wrong)
p value =	0.0655
the difference is not statistically significant

b)

z value =(M-μ)*√n/σ =			2.46
p value =	0.0070
the difference is statistically significant

c)

z value =	(x1-x2)/sqrt(σ12/n1+σ22/n2)=			3.02
p value =	0.0013
the difference is statistically significant

d)

critical difference=

z*sqrt(σ12/n1+σ22/n2)=

2.18

e)

the increase is statistically significant