Hypothesis Testing For Two Population Means ✓ Solved

Hypothesis Testing for Two Population Means

The present study shows data for salaries of accounting and marketing graduates of a business school at the end of the first year after graduation. The office of career services would like to test the claim (null hypothesis) that the average salary of accounting students is less or equal to the average salary of marketing students, against the alternative that the average salary of accounting student is higher than the average salary of marketing students. The office of career services collects a random sample of salaries of accounting and marketing students. We will use the Excel Data Analysis Add-in to test the claim and find the averages and variances for the salaries in the sample, the critical value(s) that define(s) the rejection region, the test statistic and the observed level of significance.

We will compare the test statistic with our critical value(s) and decide if we should reject or not reject the null hypothesis. We will use different alpha levels to test the hypothesis. We will find the observed level of significance using an Excel formula. We will identify possible errors made and their types. Assume that the distribution of the salaries is normal and the sample is randomly selected.

Start Excel. Download and open the workbook named: Hypothesis_Testing_for_Two_Population_Means_Start On the Data sheet, go to the Data Tab and click on Data Analysis. Double click on the "t-Test: Two-Sample Assuming Equal Variances." For Variable 1 Range, select A1:A71 and for Variable 2 Range, select B1:B61. Type 0 for the Hypothesized Mean Difference. Check the Labels box, keep the default alpha=0.05 and select Output Range under Output Option. Type D1.

In cell C4, find the mean for the sample of accounting students' salaries from the Data Analysis output table on the Data sheet. In cell C5, find the variance of the accounting students' salaries from the Data Analysis output table on the Data sheet. In cell C6, find the sample size of the accounting students from the Data Analysis output table on the Data sheet. In cell C7, find the mean for the sample of marketing students' salaries from the Data Analysis output table on the Data sheet. In cell C8, find the variance of the marketing students' salaries from the Data Analysis output table on the Data sheet. In cell C9, find the sample size of the marketing students from the Data Analysis output table on the Data sheet. In cell C10, find the pooled variance for the two samples from the Data Analysis output table on the Data sheet.

In cell C11, find the degrees of freedom for the two samples from the Data Analysis output table on the Data sheet. The office of career services would like to test the claim (null hypothesis) that the average salary of accounting students is less than or equal to the average salary of marketing students, against the alternative hypothesis that the average salary of accounting students is higher than the average salary of marketing students. Is this a two-sided test? Choose the correct answer from the dropdown menu in cell C12. In cell C13, find the value of the test statistic from the Data Analysis output table on the Data sheet.

In cell C14, find the critical value from the Data Analysis output table on the Data sheet. What is the sign of the critical value in C14? Choose your answer from the dropdown menu in cell C15. By assessing the values in cells C13, C14, and C15, do you reject the null hypothesis? Choose your answer from the dropdown menu in cell C16. Justify the answer you chose in cell C16. Choose your answer from the dropdown menu in cell C17. Based on your answer in cell C17, we can conclude at alpha = 0.05 that: Choose the correct answer from the dropdown menu in cell C18.

In cell C19, find the observed level of significance (p-value) for the test from the Data Analysis output table on the Data sheet. In cell C20, test the null hypothesis. Hint: use the T.TEST function. By considering the p-value, can the same conclusion be made about rejecting or not rejecting the claim at alpha = 0.05? Choose your answer from the dropdown menu in cell C21. If the level of significance (alpha) was reduced to 0.01, would you reject the null hypothesis that the average salary of accounting students is lower than the average salary of marketing students? Choose your answer from the dropdown menu in cell C22.

Based on your answer in cell C21, what type of error might have been made? Choose your answer from the dropdown menu in cell C23. Based on your answer in cell C22, what type of error might have been made? Choose your answer from the dropdown menu in cell C24. Save your file and submit for grading.

Paper For Above Instructions

Hypothesis testing is a vital statistical method used to determine whether to reject or accept a null hypothesis based on sample data. In this context, we will investigate the salaries of accounting and marketing graduates one year after graduation to ascertain whether accounting graduates earn less than or equal to their marketing counterparts. This study employs a significance level (alpha) of 0.05, examining the salaries through the Excel Data Analysis tool, specifically using a t-Test: Two-Sample Assuming Equal Variances.

To begin with the hypothesis tests, we establish our null and alternative hypotheses. The null hypothesis (H0) is that the average salary of accounting students (μ1) is less than or equal to the average salary of marketing students (μ2), represented as H0: μ1 ≤ μ2. Conversely, our alternative hypothesis (H1) proposes that the average salary of accounting students is greater than that of marketing students, represented as H1: μ1 > μ2. This framework defines a one-tailed test since we are specifically assessing whether accounting salaries exceed marketing salaries.

Using the provided dataset from the business school, we proceed with the calculations. First, we calculate the mean and variance for each group's salaries. Upon obtaining the output from the Data Analysis tool in Excel, we can identify crucial values, such as the mean for accounting students (C4), variance (C5), and sample size (C6), as well as corresponding values for marketing students (C7, C8, C9). The pooled variance (C10) is derived using the formula for two-sample variance, which is essential for understanding the combined variability of both datasets.

Next, we assess the degrees of freedom (C11), calculated as the sum of the two sample sizes minus two (n1 + n2 - 2). This metric serves to determine the critical value at the set alpha level, which demarcates the threshold for rejecting the null hypothesis. A critical value is derived from the t-distribution based on the established degrees of freedom and the chosen alpha level (0.05). This value, found in C14, is instrumental in our decision-making process.

We examine the test statistic located in cell C13. This statistic, generated from the mean differences adjusted for standard error, must be compared against the critical value identified earlier in C14. If the test statistic exceeds the critical value and aligns with the sign identified in cell C15, we will reject the null hypothesis, indicating that the average salary of accounting graduates is likely higher than that of marketing graduates.

Additionally, the observed level of significance, or p-value (found in cell C19), tells us more about our data's integrity concerning the null hypothesis. If the p-value is less than alpha (0.05), we also reject the null hypothesis based on this criterion alone. Moreover, testing at a lower alpha level of 0.01 (cell C22) may yield different results, potentially failing to reject the null hypothesis if the p-value remains above this threshold.

The risk of making errors in this testing framework includes Type I errors, which occur when we reject a true null hypothesis, and Type II errors, arising when we fail to reject a false null hypothesis. Our conclusions—whether we reject or accept the null hypothesis—will reflect on these potential error types (cells C23 and C24), adding an extra layer of rigor to our analysis.

In summary, utilizing Excel's t-Test for two-sample analysis provides a robust methodology to interpret whether accounting graduates earn less than or equal to marketing graduates. Through careful execution of hypothesis testing steps, we derive results that indicate the financial landscape for these graduates, allowing career services to improve their understanding of market trends and guide future students toward informed career choices.

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