an The manufacturer of an MP3 player wanted to know whether a 10% reduction in p
ID: 3198642 • Letter: A
Question
an 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 elected 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 lected price reduction resulteu in an incresse in sa units sold iast ponth at the regular and reduced prices at the randomly se Outlets. At the 01 gnificance level, can the manufacturer conclude that the Regular price 138 121 8 11514 125 96 Reduced price 128 34 152 135 114 106 112120Explanation / Answer
In this case the two tailed test will be applicable;
t = [Avg(x) - Avg(y) ] / SQRT( Sx2/n1 + Sy2/n2)
t= 117.7143 - 125.125 / Sqrt ( 396.5714/7 + 227.8393/8 )
t= -7.4107 / sqrt(56.653 + 28.479) = -7.4107 / sqrt(85.133)
t = -7.4107/9.227 = -0.80318
We see that this t value (as calcualted and termed as t stat) is within the limits of the t value of two tailed test, these limits of t value being (-3.105807 , 3.105807)
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