Simon and Bruce (1991), in demonstrating a different approach to statistics called “resampling statistics,”5 tested the null hypothesis that the price of liquor (in 1961) for the 16 “monopoly” states, where the state owned the liquor stores, was different from the mean price in the 26 “private” states, where liquor stores were privately owned. (The means were $4.35 and $4.84, respectively, giving you some hint at the effects of inflation.) For technical reasons, several states don’t conform to this scheme and could not be analyzed.
(a) What is the null hypothesis that we are actually testing?
(b) What label would you apply to $4.35 and $4.84?
(c) If these are the only states that qualify for our consideration, why are we testing a null hypothesis in the first place?
(d) Identify a situation in which it does make sense to test a null hypothesis here.