In an Introductory Marketing Class Students Were Presented with 6

question 8

Essay

In an introductory marketing class students were presented with 6 items they couldbid on in an auction. They were asked to bid privately and also estimate the "typical"bid for each item by their classmates. The items were randomly selected from a largelist of items that students might purchase. An initial analysis of the data establishedthe plausibility that the distribution of differences (estimated - actual) isapproximately normal.
a) Construct a 95% confidence intervalfor the mean difference between theactual bid and the estimated"typical" bid for the population ofitems. b) Do the data indicate that the meandiffers for the actual and estimated"typical" bids?
Provide anappropriate statistical justificationusing your response in part (a).

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Definitions:

Liability

A financial obligation or debt that an individual or company owes to another entity, which must be settled over time.

Long-term Debt

Borrowings or financial obligations that are due to be repaid over a period longer than one year.

Pro Forma Financial Statements

Financial statements based on hypothetical scenarios or assumptions about the future of a business.

Spontaneously Generated Funds

Funds generated if a liability account increases spontaneously (automatically) as sales increase. An increase in a liability account is a source of funds; thus, funds have been generated. Two examples of spontaneous liability accounts are accounts payable and accrued wages. Note that notes payable, although a current liability account, is not a spontaneous source of funds since an increase in notes payable requires a specific action between the firm and a creditor.