The manufacturer of an MP3 player wanted to know whether a 10% reduction in pric
ID: 2842346 • Letter: T
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
127
137
107
111
89
76
71
Reduced price
89
130
107
106
82
127
119
122
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.
Regular price
127
137
107
111
89
76
71
Reduced price
89
130
107
106
82
127
119
122
Explanation / Answer
The pooled variance is
s1^2/n1+s2^2/n2= 25.03^2/7+ 17.58^2/8 =128.1322
The test statistic is
t=(xbar1-xbar2)/128.1322
=(102.57-110.25)/128.1322
=-0.0599
102.57 110.25 mean 25.03 17.58 std. dev. 7 8 n
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