Hypothesis Testing
1. The Connecticut Board of Education is concerned that first year male elementary school teachers are receiving lower salaries than their female counterparts. Two independent random samples have been selected: 720 observations from population 1 (male elementary school teachers) and 710 from population 2 (female elementary school teachers). The sample means obtained are X1(bar)=$35 k and X2(bar)=$36 k. It is known from previous studies that the population variances are 5.6 and 4.0 respectively. Using a level of significance of .10, is there evidence that the first year male elementary school teachers are receiving lower salaries? Fully explain your answer.
Simple Regression
2. A CEO of a large pharmaceutical company would like to determine if he should be placing more money allotted in the budget next year for television advertising of a new drug marketed for controlling diabetes. He wonders whether there is a strong relationship between the amount of money spent on television advertising for this new drug called DIB and the number of orders received. The manufacturing process of this drug is very difficult and requires stability so the CEO would prefer to generate a stable number of orders. The cost of advertising is always an important consideration in the phase I rollout of a new drug. Data that have been collected over the past 20 months indicate the amount of money spent of television advertising and the number of orders received.
The use of linear regression is a critical tool for a manager’s decisionmaking ability. Please carefully read the example below and try to answer the questions in terms of the problem context. The results are as follows:
Month 
Advertising Cost 
Number of Orders 
1 
$99,430.00 
2,902,000 
2 
72,620 
3,800,000 
3 
99,580 
3,299,000 
4 
60,670 
2,430,000 
5 
99,180 
3,367,000 
6 
73,140 
4,011,000 
7 
93,370 
4,888,000 
8 
78,880 
4,935,000 
9 
94,990 
5,555,000 
10 
77,230 
3,654,000 
11 
91,380 
5,598,000 
12 
92,900 
2,967,000 
13 
63,270 
2,899,000 
14 
89,190 
4,245,000 
15 
90,030 
4,934,000 
16 
79,210 
3,853,000 
17 
85,770 
5,625,000 
18 
84,530 
5,778,000 
19 
99,760 
5,999,000 
20 
102,640 
6,834,000 
NOTE: If you do not have the Data Analysis option under “Tools” you must install it. You need to go to “Tools.” select “Addins” and then choose the two data tool pack options. It should take about a minute.
b. Assuming there is a statistically significant relationship, use the least squares method to find the regression equation to predict the advertising costs based on the number of orders received. Please use the regression procedure within Excel under Tools > Data Analysis to construct this equation.
c. Interpret the meaning of the slope, b_{1}, in the regression equation.
d. Predict the monthly advertising cost when the number of orders is 4,800,000. (Hint: Be very careful with assigning the dependent variable for this problem.)
e. Compute the coefficient of determination, r^{2}, and interpret its meaning.
f. Compute the standard error of estimate, and interpret its meaning.
Hypothesis Testing on Multiple Populations
3. The Course Manager for AMBA 660 wants to use a new tutorial to teach the students about environmental sustainability. As an experiment she randomly selected 38 students and randomly assigned them to one of three groups which include either a PowerPoint presentation created by the faculty, AuthorGen Presentation created by the faculty, or a well known tutorial by the ABC company. After completing their assigned tutorial, the students are given an Environmental Sustainability quiz. At the .10 significance level, can she conclude that there is a difference between how well the different tutorials work for the students?
Students Grades on the Business Ethics Test following the Tutorial
PowerPoint Tutorial 
AuthorGen Tutorial 
ABC Tutorial 
98 
89 
96 
94 
86 
78 
91 
75 
79 
88 
83 
96 
98 
74 
97 
91 
92 

90 
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