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	131	122	102	115	121	124	114
Reduced price	125	136	151	132	112	123	131	133

  Click here for the Excel Data File

At the 0.100 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.

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

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

3. State your decision about the null hypothesis.

Answer 1

The statistical software output for this problem is:

Hence,

a) Pooled estimate = 107.507

b) Test statistic = 2.23

c) Reject H0