A distributor of personal computers has five locations in the city. The sales in units for the first quarter of the year were as follows: What is the critical value at the 0.01 level of risk?
A) 7.779
B) 15.033
C) 13.277
D) 5.412

Question

A distributor of personal computers has five locations in the city. The sales in units for the first quarter of the year were as follows:  What is the critical value at the 0.01 level of risk?
A) 7.779 
B) 15.033 
C) 13.277 
D) 5.412

Quizplus · Accepted Answer

To find the critical value at the 0.01 level of risk, we need to use the t-distribution with (n-1) degrees of freedom, where n is the number of observations (in this case, n=5). From a t-distribution table with 4 degrees of freedom and a 0.01 level of significance, we find the critical value to be 3.747. However, since this is a two-tailed test (we are testing if the sample mean is significantly different from the population mean, but we do not know if it will be higher or lower), we need to multiply this value by 2, giving us a critical value of 7.494 (rounded to 3 decimal places). The closest answer choice is C) 13.277, which must be incorrect – it is possible that this is meant to be the critical value for a one-tailed test instead, but this is not specified in the question. The correct answer is C) 7.494 (rounded to 3 decimal places).

A Distributor of Personal Computers Has Five Locations in the City