You want to buy a specific computer. A sales representative of the manufacturer claims that retail stores sell this computer at an average price of $1,249 with a very narrow standard deviation of $25. You find a website that has a price comparison for the same computer at a series of stores as follows: $1,260; $1,240.99; $1,225.08, 1,250.1; 1,224.95; 1,229,99; 1,235.95; 1,249. Can you argue that pricing has a lower standard deviation than claimed by the manufacturer? Use the 5% significance level. As a potential buyer, what would be the practical conclusion from your analysis?
Inverse Normal Distribution
The method used for finding the corresponding z-critical value in a normal distribution using the known probability is said to be an inverse normal distribution. The inverse normal distribution is a continuous probability distribution with a family of two parameters.
Mean, Median, Mode
It is a descriptive summary of a data set. It can be defined by using some of the measures. The central tendencies do not provide information regarding individual data from the dataset. However, they give a summary of the data set. The central tendency or measure of central tendency is a central or typical value for a probability distribution.
Z-Scores
A z-score is a unit of measurement used in statistics to describe the position of a raw score in terms of its distance from the mean, measured with reference to standard deviation from the mean. Z-scores are useful in statistics because they allow comparison between two scores that belong to different normal distributions.
You want to buy a specific computer. A sales representative of the manufacturer claims that retail stores sell this computer at an average price of $1,249 with a very narrow standard deviation of $25. You find a website that has a price comparison for the same computer at a series of stores as follows: $1,260; $1,240.99; $1,225.08, 1,250.1; 1,224.95; 1,229,99; 1,235.95; 1,249. Can you argue that pricing has a lower standard deviation than claimed by the manufacturer? Use the 5% significance level. As a potential buyer, what would be the practical conclusion from your analysis?
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