4. If you bought a used camera in good condition from a friend, would you pay mo

Question

4. If you bought a used camera in good condition from a friend, would you pay more than if you bought the same item from a stranger? A researcher at Conell University wanted to know how friendship might affect simple sales such as this. She randomly and independently divided subjects into two groups and gave each group descriptions of a used camera in good condition that they might want to buy. One group was told to imagine buying from a friend whom they expected to see again. The other group was told to imagine buying from a stranger. Below is the output from this study. Assuming normality, test at the 1% significance level (9 points) Friend 281.875 18.31 6.47 Stranger 211.400 46.43 17.55 Equal Not Equal 3.970 13 0.0008 3.766 7.62 0.0030 Ho Test Statistic: P-Value Conclusion

Explanation / Answer

H0 : There is no difference in price between friends and strangers

H1: There is difference in price between friends and strangers

Test statistic

t = 3.970 ( for equal variance)

t = 3.766 ( for unequal variance)

P value

P = 0.008 ( for equal variance)

P = 0.0030 ( for unequal variance)

Conclusion

Since p value in both cases is less than 0.01 ( significance level)

We reject the null hypothesis

There is sufficient evidence to claim that there is difference in sale ( price) between friends and stangers .

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