Question

1. Do you want to own your own candy store? With some interest in running your own business and a decent credit rating, you can probably get a bank loan on startup costs for franchises such as Candy Express, The Fudge Company, Karmel Corn, and Rocky Mountain Chocolate Factory. Startup costs (in thousands of dollars) from a random sample of candy stores in the Chicago area are given below:

95 173 129 95 75 94 116 100 85

a) Find the sample mean, ?̅ , and sample standard deviation, ? , for the data above.

b) Find a 90% confidence interval for the population average startup costs ? for candy store franchises. Assume the population of startup costs is approximately normal. Show all work that leads to your answer.

c) You speculate that opening a candy store franchise is significantly cheaper (at the 1% level) in

the Kansas City area versus the Chicago area. Suppose you take a sample of the startup costs

from 8 franchises in the Kansas City metro. The mean of this sample is ?̅ ≈ 74.3 thousand dollars with a sample standard deviation of ?2 ≈ 10.2 thousand dollars. Do the data support your claim? Use a hypothesis test to check the claim and show all work that leads to your conclusion.

Answer 1