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Unformatted text preview: 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 t rue 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 What is the pvalue for this test? 3.17755E09 = 3.17755e09 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 • 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, but will only do so if average daily spending per capita is higher there than...
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This note was uploaded on 02/11/2010 for the course ECON 203 taught by Professor Petry during the Spring '09 term at University of Illinois, Urbana Champaign.
 Spring '09
 PETRY

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