East West University

Department of Economics
ECO 204 (1 & 9); Spring’ 2024
Assignment I
Instructor: Sayeeda Jahan (SYJ)

1 Carpetland salespersons average $8000 per week in sales. Steve Contois, the firm’s
vice president, proposes a compensation plan with new selling incentives. Steve
hopes that the results of a trial selling period will enable him to conclude that the
compensation plan increases the average sales per salesperson.
a. Develop the appropriate null and alternative hypotheses.
b. What is the Type I error in this situation? What are the consequences of
making this error?
c. What is the Type II error in this situation? What are the consequences of
making this error?
[5 marks]
2 Consider the following hypothesis test:

A sample of 50 provided a sample mean of 14.15. The population standard deviation is 3.

a. Compute the value of the test statistic.
b. What is the p-value?
c. At α = .05, what is your conclusion?
d. What is the rejection rule using the critical value? What is your conclusion?
[8 marks]

3 Consider the following hypothesis test:

A sample of 60 is used and the population standard deviation is 8. Use the critical value
approach to state your conclusion for each of the following sample results. Use α = .05.

[9 marks]

Page 1 of 2
 4. Consider the following hypothesis test:

A sample of 65 is used. Identify the p-value and state your conclusion for each of the
following sample results. Use α = .05.

[12 marks]

5. Consider the following hypothesis test:

[16 marks]

Best of luck!

Page 2 of 2