Question

1. Imagine you were using a hypothesis test to determine if a significant difference exists in mean price between the two stores (the hypotheses would be H₀: m_D= 0 vs H_a: m_D≠0).  What conclusion can be made in this case using only your confidence interval? Provide an answer and a reason for your choice in one or two sentences.  Again, please only use your confidence interval to answer this question (i.e. do not run this hypothesis test).

Confidence Interval 95%:

Lower Limit = -0.8877

Upper Limit = -0.1265

Answer 1

We see that the confidence interval does not contain 0. (i.e both signs are negative). Therefore we reject the null hypothesis ( = 0). Also since both values are negative, it indicates a decrease in value (Before - After = a decrease in value).

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Just For you information, if the confidence interval contains a positive and a negative sign (Upper limit +ve and Lower Limit -ve or Upper limit -ve and Lower Limit +ve, this means that the confidence interval contains 0 and there is a possibility that = 0)

But if the Confidence interval has both Limits negative, or both limits positive, then we Reject H0, as the CI does not contain 0.

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