Question

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 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 regular and reduced prices at the randomly selected outlets.

Regular price 138 121 123 116 116 122 132 Reduced price 143 133 151 136 144 123 130 131

At the 0.01 significance level, can the manufacturer conclude that the price reduction resulted in an increase in sales? Hint: For the calculations, assume reduced price as the first sample.

Compute the pooled estimate of the variance. (Round your answer to 3 decimal places.)

Compute the test statistic. (Round your answer to 2 decimal places.)

State your decision about the null hypothesis. Reject H0 or Fail to reject H0

Answer 1

H0: mu1=>mu2 , price reduction not increases sale.

H1: mu1< mu2. price reduction increases sale.

x-bar1= 124

n1=7

s1=7.57

x-bar2= 136.375

n2=7

s2=8.48

t= (x-bar1- x-bar2)/sqrt(s1^2/n1 +s2^2/n2)

= (124 - 136.375)/sqrt(7.58^2/7 + 8.48^2/7)

=-0.66

Eq. vars: Pool

Claim: µ1< µ2

Test Statistic, t: -0.66
Critical t: -2.680995
P-Value: 0.2086

Degrees of freedom: 12.0000

99% Confidence interval:
-37.7437 < µ1-µ2 < 21.4581

Fail to Reject the Null Hypothesis
Sample does not provide enough evidence to support the claim

conclusion: price reduction not increases sale.