Homework Soursea car dealership claims that the median tradein offer for ca
a car dealership claims that the median trade-in offer for cars is $6000. a random sample of 103 transactions resulted in 60 trade-in offers less than $6000 and 40 trade-in offers more than $6000. Test the claim at the .01 level or significance. ( THE SIGN TEST OF NON-PARAMETRIC )
a car dealership claims that the median trade-in offer for cars is $6000. a random sample of 103 transactions resulted in 60 trade-in offers less than $6000 and 40 trade-in offers more than $6000. Test the claim at the .01 level or significance. ( THE SIGN TEST OF NON-PARAMETRIC )
Solution
From the problem, r+ = 40, r - = 60, n = 100.
We know, r = max(r+, r -) = 60.
Now using the tables for binomial distribution and assuming p = 0.5, the corresponding probability is found to be 0.0108.
Since this is a two-tail test, p-value = 2 x 0.0108 = 0.0216
Since, p-value > .01, level or significance, we conclude that the median trade-in offer for cars is $6000.
