Exhibit 11-2
We are interested in determining whether or not the variances of the sales at two music stores (A and B) are equal. A sample of 26 days of sales at store A has a sample standard deviation of 30 while a sample of 16 days of sales from store B has a sample standard deviation of 20.
-Refer to Exhibit 11-2. At 95% confidence the null hypothesis
A)should be rejected
B)should not be rejected
C)should be revised
D)None of these alternatives is correct.

Question

Quizplus · Accepted Answer

To test for equality of variances, we use the F-test. The test statistic F = s1^2/s2^2 follows an F-distribution with n1-1 and n2-1 degrees of freedom under the null hypothesis. We can calculate F=30^2/20^2=2.25. At 95% confidence level with 25 degrees of freedom in the numerator and 15 degrees of freedom in the denominator, the critical value of F is 2.25. Since our calculated F value is less than the critical value, we fail to reject the null hypothesis at 95% confidence level. Therefore, we can conclude that there is not enough evidence to suggest that the variances of the sales at two music stores (A and B) are different.

Exhibit 11-2 We Are Interested in Determining Whether or Not the Variances