Question 3:

According to the Annual survey of drugs expenditure in country X, the annual expenditure for prescription drugs is $838 per person in the Northeast region of the country. A sample of 60 individuals in the Midwest shows a per person expenditure for prescription drugs of $745. Further, it is given that the population standard deviation of $300.

I. Formulate hypotheses for a test to determine whether the sample data support the conclusion that the population annual expenditure for prescription drugs per person is lower in the Midwest than in the Northeast and Identify whether it is a two-tail test or a one tail test (Left or right tail).

II. Decide the suitable test statistics and justify your selection.

III. Calculate the value of the relevant test statistics and identify the P value

IV. Based on the p value in part (III), at 99% confidence level, decide the decision criteria.

V. Make the final conclusion based on the analysis.

Question 4

The gasoline price often varies a great deal across different regions across country X. The following data show the price per gallon for regular gasoline for a random sample of gasoline service station for three major brands of gasoline (A, B and C) located in 10 metropolitan areas across the country X.

A B C

3.77 3.83 3.78

3.72 3.83 3.87

3.87 3.85 3.89

3.76 3.77 3.79

3.83 3.84 3.87

3.85 3.84 3.87

3.93 4.04 3.99

3.79 3.78 3.79

3.78 3.84 3.79

3.81 3.84 3.86

a. State the null and alternative hypothesis for single factor ANOVA to test for any significant difference in the mean price of gasoline for the three brands.

b. State the decision rule at 5% significance level.

c. Calculate the test statistic.

d. Based on the calculated test statistics decide whether any significant difference in the mean price of gasoline for three bands.