Switchingtothenewtechnologymaybeexpensive

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Unformatted text preview: strong evidence to reject the null hypothesis then the new technology will be adopted. Past experience has shown that σ = 8. A data set with n = 25 for the new technology has a sample mean of: x = 83 Does this justify adoption of the new technology ? 7 Chapter 10 The calculated test statistic is: z= 83 − 80 = 1.875 8 25 This can be compared with a critical value – see the table of critical values given earlier. With a significance level of α = 0.05 (5%) it can be seen that: z = 1.875 > zc = 1.645 Therefore, at a 5% level of significance, the conclusion is to reject the null hypothesis. There is evidence that the new technology results in a statistically significant increase in productivity. Switching to the new technology may be expensive. By choosing a significance level of α = 0.01 (1%) it is now revealed that: z = 1.875 < zc = 2.326 This leads to the conclusion that, at a 1% level of significance, the null hypothesis is not rejected. Possibly the company should stay with the current technology. 8...
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