A local car dealership is interested in determining how successful their salespeople are in turning a profit when selling a car. Specifically, they are interested in the average percentage of price markups earned on various car sales. The following table lists the percentages of price markups for a random sample of car sales by three salespeople at this dealership. Note that here the markups are calculated as follows. Suppose an auto dealer pays $14,000 for a car and lists the sale price as $20,000, which gives a markup of $6000. If the car is sold for $17,000, the markup percentage earned on this sale is 50% ($3000 is half of $6000).
a. Test at a 5% significance level whether the average markup percentage earned on all car sales is the same for Ira, Jim, and Kelly.
b. What is the Type I error in this case, and what is the probability of committing such an error? Explain.

  • CreatedAugust 25, 2015
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