EconHM2 - Q uestion#1 T his question is based on example 1...

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Question #1 This question is based on example 1 on page 24 (slide 16) of your course packet The owners of Johnny Jims claim that their stores average $875,000 in annual sales. You used this information in deciding to open a store. Your store however has not come even close to these annual sales. You want to prove that the figues given to you were misleading, and that in fact the true population sales figures must be below 875,000. You collect annual sales figures from 70 randomly selected stores. The average in your sample turns out to be $856,000, with a standard deviation of $24,000. What is the relevant point estimate? 856000 What is the value of the test statistic? -6.623558543 This test statistic has A normal distribution A t distribution with 69 degrees of freedom A standard normal distribution A t distribution with 68 degrees of freedom A t distribution with 70 degrees of freedom
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What is the p-value for this test? 3.17755E-09 = 3.17755e-09 Allowing for a 5% chance of a Type I error, what is your conclusion for this test? Do not reject the null hypothesis and conclude that there is insufficient evidence that the numbers were misleading Reject the null hypothesis and conclude that there is insufficient evidence that the numbers were misleading Reject the null hypothesis and conclude that the numbers were misleading Do not reject the null hypothesis and conclude that the numbers were misleading Suppose that all of a sudden you find out from your friend, who is in management of a similar franchise, that you can count on the standard deviation of sales being $28,000. Which steps would you undertake to carry out the same test as above but with this new piece of information? You would: calculate a z statistic use a standard normal distribution reject the null hypothesis fail to reject the null hypothesis use a t distribution with 70 degrees of freedom
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use a t distribution with 69 degrees of freedom calculate a t statistic Question #2 This question is based on example 3 on page 26 (slide 18) of your course packet Your company is considering opening a retail store in Fairbanks Alaska,
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