Assume that you are hired by the Governor's Office to study whether a tax on liquor...

 

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Assume that you are hired by the Governor's Office to study whether a tax on liquor has affected alcohol consumption in the state. You are able to obtain, for a sample of fifty individuals selected at random, the difference in liquor consumption (in ounces) for the year before and after the tax. For person i who is sampled randomly from the population, Yi denotes the change in liquor consumption. Treat these as a random sample from a Normal(u, 02 ) distribution. (A) The Governor believes there was no change in alcohol consumption. How do you test his claim? State the null and alternative hypotheses. (B) What if the Governor thought there was actually a drop in liquor consumption as a result of the tax? How would you setup the test in this case? State the null and alternative hypotheses. What economic arguments would you use to justify your choice of hypothesis test? 4 (C) Now assume that for your sample of size n=50, you have obtained a mean Y = -32.8 and a sample standard deviation s = 100. Formally conduct the hypothesis test from part (B) using these values and a 5% significance level. Does your conclusion change at a 1% significance level? (D) Construct a 95% confidence interval for the mean change in liquor consumption based on your hypothesis from point (A). Assume that you are hired by the Governor's Office to study whether a tax on liquor has affected alcohol consumption in the state. You are able to obtain, for a sample of fifty individuals selected at random, the difference in liquor consumption (in ounces) for the year before and after the tax. For person i who is sampled randomly from the population, Yi denotes the change in liquor consumption. Treat these as a random sample from a Normal(u, 02 ) distribution. (A) The Governor believes there was no change in alcohol consumption. How do you test his claim? State the null and alternative hypotheses. (B) What if the Governor thought there was actually a drop in liquor consumption as a result of the tax? How would you setup the test in this case? State the null and alternative hypotheses. What economic arguments would you use to justify your choice of hypothesis test? 4 (C) Now assume that for your sample of size n=50, you have obtained a mean Y = -32.8 and a sample standard deviation s = 100. Formally conduct the hypothesis test from part (B) using these values and a 5% significance level. Does your conclusion change at a 1% significance level? (D) Construct a 95% confidence interval for the mean change in liquor consumption based on your hypothesis from point (A).

Answer rating: 100% (QA)

C Standard error of mean sVn 100 V50 1414214 Test statistic t 328 0 1414214 232 Deg... View the full answer