The manufacturer of an MP3 player wanted to know whether a 10 percent reduction
ID: 3153167 • 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
126
88
115
145
125
96
Reduced price
124
135
152
134
116
105
114
117
At the .050 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.
H0.
Regular price
137
126
88
115
145
125
96
Reduced price
124
135
152
134
116
105
114
117
Explanation / Answer
X (Mean)=119.286
Standard Deviation (s.d1)=20.799
Number(n1)=7
Y (Mean)=124
Standard Deviation(s.d2)=13.71
Number(n2)=8
Value of Combined Standard deviation is S= (n1-1*s1^2 + n2-1*s2^2 )/(n1+n2-2)S^2 = (6*432.598 + 7*187.964) / (15- 2 )S^2 = 300.872
we use Test Statistic (t) = (X-Y)/Sqrt(S^2(1/n1+1/n2))to=119.286-124/Sqrt((300.872 )* (1/7)+(1/8))to=-4.714/8.977to=-0.525
Pooled Variance =300.87
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