A Researcher Would Like to Determine Whether a New Tax

question 20

Essay

A researcher would like to determine whether a new tax on cigarettes has had any effect on people's behavior.During the year before the tax was imposed,stores located in rest areas on the state thruway reported selling an average of µ = 410 packs per day with σ = 60.The distribution of daily sales was approximately normal.For a sample of n = 9 days following the new tax,the researcher found an average of M = 386 packs per day for the same stores.
a. Is the sample mean sufficient to conclude that there was a significant change in cigarette purchases after the new tax. Use a two-tailed test with α = .05.
b. If the population standard deviation was σ = 30, is the result sufficient to conclude that there is a significant difference?
c. Explain why the two tests lead to different outcomes.

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Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing to purchase at a given price level in a given period.

Coefficient

A numerical value that multiplies a variable in an equation, serving as a measure of some property or characteristic.

Price Elasticity

Refers to how sensitive the quantity demanded of a good is to a change in its price.

Demand Curve

A graph showing the relationship between the price of a good or service and the quantity demanded for a given period.