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 sampled outlets.

Regular price	100	78	102	80	85	109	103
Reduced price	136	138	97	119	105	115	120	131

At the .010 significance level, can the manufacturer conclude that the price reduction resulted in an increase in sales? Hint: For the calculations, assume the Reduced price as the first sample.

The pooled variance is . (Round your answer to 2 decimal places.)

The test statistic is . (Negative value should be indicated by a minus sign. Round your answer to 3 decimal places.)

(Do not reject, Reject) H0.

Answer 1

Date: 13/05/2019 Answe To test the hypothesis is that the price reduction resulted in an increase in sales at 1% significance level. The null and alternative hypothesis is, The pooled variance is, Byusing Excel software, find pooled variance with the help of following steps: 1) Import the data. 2) Select t-test: Two Sample Assuming Equal Variances from Data Analysis in Data menu 3) Select Variable 1 Range and Variable 2 Range. 4)Give Hypothesized Mean Difference 5) Select Labels and give Alpha. 6) Choose Output Range from Output options 7) Click Ok.

t-Test:Two-Sample Assuming Equal Variances Reduced price Regular price 120.125 93.85714286 211.5535714 156.4761905 Mean Variance Observations Pooled Variance Hypothesized Mean Difference df t Stat P(T<=t) one-tail t Critical one-tail P(T<=t) two-tail t Critical two-tail 186.1332418 13 3.720155205 0.001284713 2.650308836 0.002569426 3.012275833 From the Excel output, the pooled variance is |186.13 The t-test statistics is, From the Excel output, the t-test statistics is 3.720 The p-value for this test is,

From the Excel output, thep-value for this test is 0.0013. Decision The conclusion is that p-value in this context is less than 0.01 which is 0.0013, so the null hypothesis is rejected at 1% level of significance. There is sufficient evidence to indicate that the price reduction resulted in an increase in sales. The result is statistically significant.