Perform the Indicated Sign Test $$\alpha$$ = 001

question 65

Essay

Perform the indicated sign test. Be sure to do the following: Identify the claim mathematically and state the null and
alternative hypotheses. Determine the critical value and find the test statistic. Decide whether to reject or fail to reject
the null hypothesis and interpret the decision in the context of the original claim.
-A pharmaceutical company wishes to test a new drug with the expectation of lowering cholesterol levels. Ten
subjects are randomly selected and their cholesterol levels are recorded. The results are listed below. The
subjects were placed on the drug for a period of 6 months, after which their cholesterol levels were tested
again. The results are listed below. (All units are milligrams per deciliter.)Use the sign test to test the
companyʹs claim that the drug lowers cholesterol levels. Use $$\alpha$$ = 0.01. $$\begin{array} { l c c c c c c c c c c } \hline \text { Subject } & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 & 9 & 10 \\\hline \text { Before } & 220 & 231 & 230 & 215 & 241 & 254 & 179 & 199 & 171 & 186 \\\text { After } & 205 & 226 & 238 & 205 & 236 & 254 & 149 & 181 & 169 & 171 \\\hline\end{array}$$

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Definitions:

Consumption Increase

A rise in the amount of goods and services consumed by households or the economy over a period.

Price Increase

A rise in the cost of goods or services, affecting demand, supply, and inflation.

Optimal Consumption

The mix of goods and services that maximizes a consumer's utility given their budget constraints.

Initial Endowment

The initial quantity of goods, services, or resources an individual, institution, or country possesses at the start of an economic analysis.