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    Hypothesis Testing and its Interpretation

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    A company has been using the same advertising strategy for a number of years and over that time has had relatively constant monthly sales. The mean of these sales is £1.3m. 12 months ago it changed its strategy and over these 12 months the monthly sales have been £1.45m with a standard deviation of £0.3m. It now wants to test whether there is evidence that this new advertising strategy is more successful than its previous strategy.

    a) Construct a suitable hypothesis test for this investigation.

    b) Test whether you would reject the null hypothesis at the 0.05 significance level and comment on your result.

    Please do not use excel functions - I would like to see clear workings and commentary for calculations

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    Solution Preview

    i) Construct a suitable hypothesis test for this investigation.
    Let u be the mean of sales. Ho: u=1.3 vs Ha: p>1.3

    ii) Test ...

    Solution Summary

    The solution gives the detailed steps required for hypothesis testing. All formula and calculations are shown and explained.