Question

7. A bank is investigating ways to entice customers to charge more on their credit cards. (Banks earn a fee from the merchant on each purchase, and hope to collect interest from the customers as well). A bank selects a random group of customers who are told their "cash back" will increase from 1% to 2% for all charges above a certain dollar amount each month. Of the 500 customers who were told the increase applied to charges above $1000 each month, the average increase in spending was 1x  $527 with standard deviation $225. Of the 500 customers who were told the increase applied to charges above $2000 each month, the average increase in spending was 2 x  $439 with standard deviation $189. When testing whether or not the increases in spending are different, the appropriate test would be:

a. a matched pairs sample t-test

b. a two sample proportion z-test

c. a two independent sample t-test

d. a two independent sample z-test

Answer 1

7. n1 = 500 for charges above $1000 each month,

average increase in spending = 1x  $527

standard deviation $225.

n2 = 500 cfor increase applied to charges above $2000 each month

average increase in spending = 2 x  $439

standard deviation $189

claim : whether or not the increases in spending are different ( two tail test )

c. a two independent sample t-test