In conjunction with the housing foreclosure crisis of 2009 m

In conjunction with the housing foreclosure crisis of 2009, many economistsexpressed increasing concern about the level of credit card debt and effortsof banks to raise interest rates on these cards. The banks claimed theincreases were justified. A Senate sub-committee decided to determine if theaverage credit card balance depends on the type of credit card used. Thecards under consideration are Visa, MasterCard, Discover, and AmericanExpress. The sample sizes to be used for each level are 25, 25, 26, and 24,respectively.
a. Describe the parameter of interest for this analysis. (1 mark)

b. Determine the factor associated with this experiment. (2 marks)

c. Describe the levels of the factor associated with this analysis. (1 mark)

d. State the number of degrees of freedom available for determining the between-samples variation. (2 marks

)e. State the number of degrees of freedom available for determining thewithin-samples variation. (2 marks)f. State the number of degrees of freedom available for determining thetotal variation. (2 marks)

Solution

a. The mean is the parameter of interest for this analysis because average credit card balance depends on the type of credit card used.

b. the factor associated with this experiment is (i) credit card debt (ii) type of credit card

c.the levels of the factor associated with this analysis is 1 and 4.

d. The number of degrees of freedom available for determining the between-samples variation is

4-1=3

e. the number of degrees of freedom available for determining thewithin-samples variation is

25+25+26+24-4=96

f. the number of degrees of freedom available for determining thetotal variation is 96+3=99