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Hypothesis Testing for a Retail Store Manager

Problem 1

A retail store manager is trying to estimate the average purchase transaction amount for a particular store. She takes a sample of 35 transactions and determines the mean purchase transaction amount from this same is $85 with a standard deviation of $35.

a) What is the point estimate of the average purchase transaction amount?
b) Calculate a 90% confidence interval estimate for the average purchase transaction amount.
c) Reconsider the information presented above. If a sample size of 20 is used, recalculate the 90% confidence interval estimate for the average purchase transaction amount.

Problem 2

The retail store manager mentioned in problem 1 wants to estimate the proportion of purchases in which the transaction amount exceeds $100. She takes a sample of 250 transactions and finds that 100 of the exceed $100.

a) What is the point estimate of the proportion of transactions that exceed $100.

b) Calculate a 95% on the proportion of transactions that exceed $100.

Problem 3

A real estate broker believes that the average time his office takes to sell a house is less than 90 days. He wants to confirm his belief. He reviews a sample of 30 recent sales and finds the average selling time is 85 days with a standard deviation of 20 days.

a) Conduct a hypotheses test to confirm if the real estate broker's claim is valid. Test to an alpha of 1%.

b) What is the p-value?

c) Based on the definition of Type 1 and Type 2 error, which error could have been committed based on the results of the hypothesis test. What are the potential consequences of committing that error for this situation?

Solution Summary

The solution addresses hypothesis testing in regard to a retail store manager trying to estimate the average purchase transaction amount for a particular store and a broker trying to determine the number of days it takes to sell his house. This solution is provided in an attached Word document.

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