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	134	129	99	114	120	128	97
Reduced price	128	135	152	135	115	128	131	132

At the 0.025 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. (Round your answer to 3 decimal places.)

2. Compute the test statistic. (Round your answer to 2 decimal places.)

3. State your decision about the null hypothesis.

• Reject H₀

• Fail to reject H₀

Answer 1

The excel output for this test is:

Hence,

a) Pooled variance = 156.571

b) Test statistic = 2.27

c) Reject Ho