t Tests and retail: Many communities worldwide are lamenting the effects of so¬-

Question

t Tests and retail: Many communities worldwide are lamenting the effects of so¬-called big box retailers (e.g., Walmart) on their local economies, particularly on small, independently owned shops. Do these large stores affect the bottom lines of locally owned retailers? Imagine that you decide to test this premise. You assess earnings at 20 local stores for the month of October, a few months before a big box store opens. You then assess earnings the following October, correcting for inflation. What hypothesis test would you use and why?

Explanation / Answer

We use t-test when the population standard deviation is unknown and the sample size is small. Small sample size means the sample size which is less than 30. Here the sample size is 20, so we can say that the sample size is small. In this given question we find that there is no value of standard deviation is given so we can say that the population standard deviation is unknown.

Answer: A. A single sample t-test because we do not know the population standard deviation.

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