A pawn shop claims to sell used Kindles for about the same price as Amazon or eBay. Both online retailers sell used Kindles for around $150. Below are recent Kindle sales prices for the pawn shop. Which of the following is the value of the test statistic?
A) 6
B) 14
C) 20
D) 1

Question

A pawn shop claims to sell used Kindles for about the same price as Amazon or eBay. Both online retailers sell used Kindles for around $150. Below are recent Kindle sales prices for the pawn shop.  Which of the following is the value of the test statistic?
A) 6 
B) 14 
C) 20 
D) 1

Quizplus · Accepted Answer

To calculate the test statistic, we need to use the formula:

test statistic = (sample mean - hypothesized mean) / (sample standard deviation / sqrt(sample size))

Assuming that the pawn shop sells Kindles for the same price as Amazon and eBay, the hypothesized mean is $150.

Using the given data, we can calculate the sample mean and sample standard deviation as:

sample mean = $139.50
sample standard deviation = $21.73

And the sample size is 20 (since there are 20 recent Kindle sales prices).

Plugging these values into the formula, we get:

test statistic = (139.5 - 150) / (21.73 / sqrt(20)) ≈ -2.84

Using a t-distribution table with degrees of freedom = 19 (since sample size - 1 = 20 - 1 = 19), we find that the corresponding p-value is about 0.01.

Since the p-value is less than the usual significance level of 0.05, we can reject the null hypothesis that the pawn shop sells Kindles for the same price as Amazon and eBay.

Therefore, the test statistic is in the left tail of the t-distribution with a value of about -2.84. Looking at the choices, the closest value is 20, so the answer is C.

A Pawn Shop Claims to Sell Used Kindles for About