Econometrics: A big company negotiates a contract with its employees. The company claims that the new?

Posted on 2014-04-15 11:45:00 in Economics by STAZ

incentive scheme that's part of the contract has resulted in average weekly earnings of at least $400 for all employees. The union representing the employees is not so sure about the compant's claim, so it takes a random sample of 15 workers and finds that their weekly earnings have an average of $381.35 and a standard deviation of $48.60. (Assume a Normal distribution)

a) Test the company's claim. (Formulate the test Ho, and H1, find the p-value, and state at what levels of signficance the null can be rejected).

b) If the same sample results (same sample mean and standard deviation) had been obtained from a random sample of 50 employees, could the company's claim be rejected at a lower significance level than in part a)?

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