Question

In an article in the Journal of Marketing, Bayus studied the differences between "early replacement buyers” and "late replacement buyers” in making consumer durable good replacement purchases. Early replacement buyers are consumers who replace a product during the early part of its lifetime, while late replacement buyers make replacement purchases late in the product’s lifetime. In particular, Bayus studied automobile replacement purchases. Consumers who traded in cars with ages of zero to three years and mileages of no more than 35,000 miles were classified as early replacement buyers. Consumers who traded in cars with ages of seven or more years and mileages of more than 73,000 miles were classified as late replacement buyers. Bayus compared the two groups of buyers with respect to demographic variables such as income, education, age, and so forth. He also compared the two groups with respect to the amount of search activity in the replacement purchase process. Variables compared included the number of dealers visited, the time spent gathering information, and the time spent visiting dealers.

(a) Suppose that a random sample of 807 early replacement buyers yields a mean number of dealers visited of x ¯ x¯ = 3.3, and assume that σ equals .79. Calculate a 99 percent confidence interval for the population mean number of dealers visited by early replacement buyers. (Round your answers to 3 decimal places.) The 99 percent confidence interval is [, ].

(b) Suppose that a random sample of 493 late replacement buyers yields a mean number of dealers visited of x ¯ x¯ = 4.2, and assume that σ equals .66. Calculate a 99 percent confidence interval for the population mean number of dealers visited by late replacement buyers. (Round your answers to 3 decimal places.) The 99 percent confidence interval is [, ].

(c) Use the confidence intervals you computed in parts a and b to compare the mean number of dealers visited by early replacement buyers with the mean number of dealers visited by late replacement buyers. How do the means compare?

Answer 1

(a)

(b)

(c)

All the values of confidence interval of part b are above the confidence interval of part a. It shows that the mean number of dealers visited by early replacement buyers is smaller than the mean number of dealers visited by late replacement buyers.