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Answer On Question 39513 - Math - Statistics

The document summarizes a statistical analysis testing if retail prices vary significantly between three cities (Bombay, Kolkata, Delhi) based on price data from four randomly selected shops in each city. It calculates the total, between, and within sum of squares and uses an F-test to compare the between-city variation to within-city variation. The calculated F-value of 2.616 is less than the critical F-value of 4.261, so the null hypothesis that the mean prices are the same across cities is accepted - the price differences between cities are not statistically significant.

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136 views1 page

Answer On Question 39513 - Math - Statistics

The document summarizes a statistical analysis testing if retail prices vary significantly between three cities (Bombay, Kolkata, Delhi) based on price data from four randomly selected shops in each city. It calculates the total, between, and within sum of squares and uses an F-test to compare the between-city variation to within-city variation. The calculated F-value of 2.616 is less than the critical F-value of 4.261, so the null hypothesis that the mean prices are the same across cities is accepted - the price differences between cities are not statistically significant.

Uploaded by

Nithyananda Patel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Answer on question 39513 – Math – Statistics

Test the significance of variation of the retail prices of the commudity in three principle cities;
Bombay, Kolkata and Delhi. The four shops were chosen at random in each city and prices
observed in rupees were as follows.
Bombay 16 8 12 14
Kolkatta 14 10 10 6
Delhi 4 10 8 8
Do the data indicate the prices in the three cities are significantly different?
Solution

𝐻0 : 𝜇1 = 𝜇2 = 𝜇_3, i.e., the mean prices in the three cities are the same.

In order to simplify the calculation, subtract 10 from each observation. The deviations and their squares as
follow:

Bombay Kolkata Delhi


𝑋1 𝑋12 𝑋2 𝑋22 𝑋3 𝑋32
6 36 4 16 -6 36
-2 4 0 0 0 0
2 4 0 0 -2 4
4 16 -4 16 -2 4
∑ 𝑋1 = 10 ∑ 𝑋12 = 60 ∑ 𝑋2 = 0 ∑ 𝑋22 = 32 ∑ 𝑋3 = −10 ∑ 𝑋32 = 44

𝑇 = ∑ 𝑋1 + ∑ 𝑋2 + ∑ 𝑋3 = 10 + 0 − 10 = 0

𝑇 2 02
𝐶. 𝐹. = = =0
𝑁 12
TSS=Total sum of squares= ∑ 𝑋12 + ∑ 𝑋22 + ∑ 𝑋32 − 𝐶. 𝐹. = 60 + 32 + 44 − 0 = 136

(∑ 𝑋1 )2 (∑ 𝑋2 )2 (∑ 𝑋3 )2 (10)2 (0)2 (−10)2


𝑆𝑆𝐵 = [ + + ] − 𝐶. 𝐹. = [ + + ] − 0 = 50
𝑛1 𝑛2 𝑛3 4 4 4

SSW=SST-SSB=136-50=86.

The various sum of squares (S.S.) along with the degrees of freedom (d.f.) are shown in the following table

Source of variation Sum of square Degrees of Mean sum of F-Radio


freedom squares
Between city 50 3-1=2 25 25
𝐹= = 2 ∗ 616
Within city 86 9 9*556 9 ∗ 556

Total 136 12-1=11

For 𝑣1 = 2 and 𝑣2 = 9, the table value of F at 5% I.o.s.=4*261

Since the calculated value of F is less than the table value of F the null hypothesis is accepted. We thus
conclude that the mean prices in the three cities is not significantly different.

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