Amanda Mueller
MBA6018 – Data Analysis
Unit 3 Activity 1
January 23, 2013

Practical Application Scenario 1

In 2010, Playbill Magazine contracted Boos Allen to conduct a survey aimed at determining the average annual household income of Playbill readers. 300 readers were randomly pulled and sampled from the list of customers provided by Playbill Magazine. From that sampling effort, Boos Allen was confident that the population average household income is $119,155 and that the population sample household income standard deviation is $30,000.

Two Playbill executives recently hypothesized that the average annual household income of its readership has increased and so believe that the magazine price should also increase. From a …show more content…

Both of these values are larger than the hypothesized population mean of $119,155. Therefore, it can be concluded that Playbill Magazine can increase the selling price of its magazine. Input Variables: | | Sample Mean (x-bar) | 124450 | Population Standard Deviation (sigma): | 30000 | Sample Size (n): | 300 | Confidence Level: | 0.95 | | | Intermediate Calculations: | | Standard Error of the Estimate: | 1732.05081 | Prob. in One Tail for This Conf Level: | 0.025 | Prob. To Use in NORMSINV: | 0.975 | Z-Multiple: | 1.960 | | | Confidence Interval: | | Lower Limit: | 121055.24 | Upper Limit: | 127844.76 | Margin of Error: | 3394.76 |

Even if the α value was lowered to 0.01, the null hypothesis would still be rejected because the p-value of 0.00114 is less than the α value of 0.01. Using a confidence interval test, one can determine that, even with the smaller α value of 0.01, both the lower limit ($119,988) and the upper limit ($128,911) are still larger than the hypothesized population mean of $119,155. With an α value of 0.01, one can be 99% confident that the population mean (annual household income of Playbill readers) is between $119,988 and $128,911. In this case, the null hypothesis H0 would again be rejected, and the price of the magazine would increase. Input Variables: | | Sample Mean (x-bar) | 124450 |