Question

A medical survey in 1990 indicated that 43% of Australian adults prefer to take a name brand prescription drug than pay less for the generic equivalent. A pharmaceutical company believes that with the financial crisis, the percentage of Australian adults willing to take a cheaper generic drug may have risen. The research department conducted a study where a random sample of Australian adults were asked whether or not they would accept a cheaper generic prescription drug.

1) What type of hypothesis test would be appropriate to investigate the pharmaceutical company’s prediction

2) What is the population we can draw conclusions about in this study?

3) The appropriate hypothesis test was conducted and a p-value of .143 was obtained. Based on the results of this study, the pharmaceutical company concludes that the percentage of Australian adults willing to take a cheaper generic prescription drug has remained steady at 43%. Comment on the validity of this conclusion. Provide justification for your answer.

Answer 1

Answer

(A) one proportion z hypothesis testing is appropriate for the claim testing because we have population proportion and sample data to test the claim. So, a single proportion z test is enough for testing.

(B) it is given that the population proportion is given for Australian adults, so the population that we can draw conclusion about in this study is Australian adults

(C) p value is 0.143

this p value is greater than 0.01 and 0.05 significance level. So, we can say that the result is insignificant at 0.01 and 0.05 significance levels.

We know that when p value is greater than significance level, then we fail to reject the null hypothesis

In this case, null hypothesis is that the proportion equals to 43%

so, given statement is correct and valid based on the given p value.

Null hypothesis Ho: proportion of Australian adults who prefer to take a name brand prescription drug than pay less for the generic equivalent is equal to 0.43

Alternate hypothesis H1: proportion of Australian adults who prefer to take a name brand prescription drug than pay less for the generic equivalent is less than 0.43