Bonnie and Clyde decided to compromise assuming that population variances were entirely unknown and moved on to Scenario B.

Two independent groups of car policies, each having n1 = n2 = n = 16 observations were analyzed. Individual records are assumed to be independent normally distributed, with population variances for groups I and II being unknown.

Targeted parameter was (1 2), or difference between two population means.

Sample summaries were found as follows:

Means (Xbar)1 = 105 and (Xbar)2 = 111

Sample Variances (s1)squared = 10 and (s2)squared = 90

1. At significance level = 0.01, do you have enough evidence that 1 < 2?

Show test statistic, critical value, rejection rule, and then state your decision, that is whether you have or do not have evidence to reject the null hypothesis in favor of alternative.

2. Estimate the difference between two population means, 1 2 with confidence C = 0.95. Show critical value, margin of error and evaluate confidence limits.