Question: A consumer advocacy group is concerned about the variability in the cost of a generic drug. There is cause for concern if the variance of the cost exceeds 5 ($)2. The group surveys seven local pharmacies and obtains the following prices (in $) for a particular generic drug: 3 2 , 3 6 , 3 8 , 3 2 , 4 0 , 3 1 , 34.
a. Use the p -value approach to test if there is a cause for concern for the consumer group at a 1% significance level.
b. What assumption regarding the generic drug prices was made in this analysis?