PROBLEM 5. Tara Pearl founded a multimillion-dollar furniture business that spec
ID: 3370297 • Letter: P
Question
PROBLEM 5. Tara Pearl founded a multimillion-dollar furniture business that specializes in making futons. Retail prices for these futons vary from store to store, and it's believed that the average retail price of a futon is $210. Tara's marketing department suspects that this price is too low. A random sample of 41 stores yielded the average retail price of $229 with the standard deviation of $60.20. Is the testing result significant at the level of significance a of 0.05? From Tara's company's records it's known that that the distribution of retail prices of their futons is Normal. Question 7 (2 points): State the hypotheses to be tested. a) Ho : ?-210, Ha : ? #210 b) Ho: ?-210, Ha : ?> 210 c) Ho: ?-210, Ha : ?Explanation / Answer
5. Answer to 5 is Yes, please read through answer to part 9 to get this answer too.
Questions haven't been asked in order, so please read through the formulae and the detailed explanation clearly to know all parts' answers. Please don't hesitate to give a "thumbs up" in case the answer has been of help! Have a greate day ahead!
Pop. mean = Mu = 210
n = 41
Sample. mean = 229
Stdev = 60.20
alpha = .05
Give: Distribution of retail prices is normal.
Answer to 7.
Lets first put up the hypothesis being tested: Tar'marketing dept suspects that price the price of $210 is too low
Always, claim ( like these ) come in the alternate hypothesis. Hence, Ha: Mu > 210, Ho: Mu = 210
b) is correct
Answer to 8.
Lets calculate test statistic, Z =(X-Mu)/(Sigma/sqrt(n)) = (229-210)/(60.20/sqrt(41)) = 2.021
Hence, answer to 8 is d) 2.021
Answer to 9
Lets first calculate critical 1 tailed value at alpha = .05 , it is 1.645
Now TS is 2.021 ( as calc. in part 8)
If TS(2.021)>1.645 then we say result is significant at alpha = .05 i.e. we reject the null hypothesis and conclude that claim of the marketing dept was CORRECT
Hence, Option b) is correct
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