The manufacturer of an MP3 player wanted to know whether a 10 percent reduction
ID: 3134441 • Letter: T
Question
The manufacturer of an MP3 player wanted to know whether a 10 percent 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
137
124
88
115
146
129
96
Reduced price
127
132
152
138
116
104
114
116
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
137
124
88
115
146
129
96
Reduced price
127
132
152
138
116
104
114
116
Explanation / Answer
H0: Mean before reduction = Mean after reduction
Ha: mu1 < mu2
Mean difference = -5.71
Since sample size is small t test is used
df = 14-1 =13
Pooled variance = 89.908
std error for difference = 9.482
t =-0.6027
p = 0.2775
As p >0.1, null hypothesis is accepted
There is no significant increase in sales due to price reduction
Group Group One Group Two Mean 119.29 125.00 SD 21.15 15.49 SEM 7.99 5.48 N 7 8Related Questions
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