Haircuts You Need to Find a New Hair Stylist and Know

question 716

Essay

Haircuts You need to find a new hair stylist and know that there are two terrific salons in
your area, Hair by Charles and Curl Up & Dye. You want a really good haircut, but you do
not want to pay too much for the cut. A random sample of costs for 10 different stylists was
taken at each salon (each salon employs over 100 stylists).
a. Indicate what inference procedure you would use to see if there is a significant
difference in the costs for haircuts at each salon. Check the appropriate assumptions and
conditions and indicate whether you could or could nor proceed. (Do not do the actual
test.)
b. A friend tells you that he has heard that Curl Up & Dye is the more expensive salon.
i. Write hypotheses for your friend's claim.
ii. The following are computer outputs. Which output is the correct one to use for this
test? Explain.
iii. Use the appropriate computer output to make a conclusion about the hypothesis
test based on the data. Make sure to state your conclusion in context.

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Definitions:

Homogeneous Oligopoly

A market structure characterized by a few firms producing identical or very similar products, leading to significant inter-firm competition.

Identical Products

Products that are exactly the same in every feature, often used in economic models of perfect competition.

Collusively

Acting in coordination with others, often in secret, to limit competition and manipulate market outcomes, such as setting prices.

Product Demand

The desire and willingness of consumers to purchase a particular good or service at a given price.