as a owner of a business, having a consistent level of sales is important. prior
ID: 3206480 • Letter: A
Question
as a owner of a business, having a consistent level of sales is important. prior to the recession that started in 2007, the standard deviation of the sales of a local business was $505. In a sample of 31 weeks since the start of the recession, sales have averaged $6800 per week with a standard deviation of $837. When testing the hypothesis (at the 5% level of significance) that the variance is higher than it was pre-recession, what is the test statistic. the correct answer is 82.41 but I have no idea how to work it
Explanation / Answer
To test a claim about the value of the variance or the standard deviation of a population, then the test statistic will follow a chi-square distribution with n1 dgrees of freedom, and is given by the following formula.
Chi square=(n-1)s^2/sd^2=30*837^2/505^2=82.41
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.