Question

An electric car company’s sales manager is interested in the salaries of people who are on the wait list for their most affordable model and wonders if it is different from the median salary at their company of $97,000. The company sends a survey to a random sample of 2000 of the people on the wait list and 85 of the respondents report having salaries below $97,000 and 103 have salaries above. The rest of the surveys were not returned. (a) Carry out and interpret a sign test of the hypothesis: Ho : M = $97, 000 vs HA : M 6= $97, 000 where M is the median salary of the people on the wait list. (b) Carry out and interpret a proportion test of the hypothesis: Ho : π = 0.5 vs HA : π 6= 0.5, (after checking relevant assumptions) where π is the proportion of people on the wait list with salaries above the median salary at the company. (c) Why should the car company’s sales manager be cautious about putting too much weight on the results of this survey (hint: think about the data collection)?

Answer 1