Hypothesis testing With the extra profits generated from the new customers, Jacobi is considering expanding his product range. He is interested in stocking a new type of motorcycle headset camera. To fit with current business plans, the new product would have to generate a minimum of 37.5% margin to be worthwhile. With that in mind, he hypothesizes that customers will be willing to pay at least $350 for this product, which is the minimum sale price for it to be viable at the specified margin. To test if his belief is true, Jacobi hires a market researcher (you) to determine how much customers may be willing to pay for this product. You collect data from a sample of 100 motorcycle enthusiasts, all of whom resemble Jacobi’s usual clientele, and determine that the average amount people are willing to pay is $364, with a standard deviation of $35. Using this information, you conduct a hypothesis test at a 5% level of significance to check whether Jacobi’s belief is justified
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
Hypothesis testing
With the extra profits generated from the new customers, Jacobi is considering expanding his product
To test if his belief is true, Jacobi hires a market researcher (you) to determine how much customers may be willing to pay for this product. You collect data from a sample of 100 motorcycle enthusiasts, all of whom resemble Jacobi’s usual clientele, and determine that the average amount people are willing to pay is $364, with a standard deviation of $35.
Using this information, you conduct a hypothesis test at a 5% level of significance to check whether Jacobi’s belief is justified and to help him decide whether to stock this product.
Conduct in detail all stages of the hypothesis test
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