Formulate the null and alternative hypotheses

Question

Asssignment:

Q1: Bank of America's Consumer Spending Survey collected data on annual credit card charges in seven different categories of expenditures: transportation, groceries, dining out, household expenses, home furnishings, apparel, and entertainment (U.S. Airways Attaché, December 2003). Using data from a sample of 42 credit card accounts, assume that each account was used to identify the annual credit card charges for groceries (population 1) and the annual credit charges for dining out (population 2). Using the difference data, the sample mean difference was d=$850, and the sample standard deviation was sd=$1123

1. Formulate the null and alternative hypotheses to test for no difference between the population mean credit card charges for groceries and the population mean credit card charges for dining out.
2. Use a .05 level of significance. Can you conclude that the population means differ? What is the p-value?
3. Which category, groceries or dining out, has a higher population mean annual credit card charge? What is the point estimate of the difference between the population means? What is the 95 percent confidence interval estimate of the differences between the population means?

Q2: In the last presidential election, before the candidates started their major campaigns, the percentages of registered voters who favored the various candidates were as follows:

Republicans    34%

Democrats      43%

Independents  23%

After the major campaigns began, a random sample of 400 voters showed that 172 favored the Republican candidate; 164 were in favor of the Democratic candidate; and 64 favored the Independent candidate. We are interesting in determining wheter the proportion of voters who favored the various candidates had changed.

1. Compute the test statistic.
2. Using the p-value approach, tests to see if the proportions have changed.
3. Using the critical value approach, test the hypotheses.
4. Using CHITEST in Excel, determine the p-value.

Q3: Would you expect more reliable cars to cost more? Consumer Reports rated 15 upscale sedans. Reliability was rated on a 5-point scale: poor (1), fair (2), good (3), very good (4), and excellent (5). The price and reliability rating for each 15 cars are shown (Consumer Reports, February 2004).

Make and Model	Reliability	Price ($)
Acura TL	4	33,150
BMW 330i	3	40,570
Lexus IS300	5	35,105
Lexus ES330	5	35,174
Mercedes-Benz C320	1	42,230
Lincoln LS Premium (V6)	3	38,225
Audi A4 3.0 Quatro	2	37,605
Cadillac CTS	1	37,695
Nissan Maxima 3.5 SE	4	34,390
Infiniti I35	5	33,845
Saab 9-3 Aero	3	36,910
Infiniti G35	4	34,695
Jaguar X-Type 3.0	1	37,995
Saab 9-5 Arc	3	36,955
Volvo S60 2.5T	3	33,890

1. Develop a scatter diagram for these data with the reliability rating as the independent variable.
2. Dvelop the least squares estimated regression equation.
3. Based upon your analysis, do you think more reliable cars cost more? Explain.
4. Estimate the price for an upscale sedan that has an average reliability rating.