A bank is investigating ways to entice customers to charge more on their credit

Question

A bank is investigating ways to entice customers to charge more on their credit cards. (Banks earn a fee from the merchant on each purchase, and hope to collect interest from the customers as well.) A bank selects a random group of customers who are told their "cash back" will increase from 1% to 2% for all charges above a certain dollar amount each month. Of the 500 customers who were told the increase applied to charges above $1000 each month, the average increase in spending was $527 with standard deviation $225. Of the 500 customers who were told the increase applied to charges above $2000 each month, the average increase in spending was $439 with standard deviation $189. When testing whether or not the increases in spending are different, the test is significant at ? = A. 5% B. 1% C. Either of the above choices is correct

Explanation / Answer

C. Either of the above choices is correct sqrt(s1^2/n1 +s2^2/n2)

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