Chapter 9.1, Problem 18BSC

Testing Claims About Proportions. In Exercises 7–22, test the given claim. Identify the null hypothesis, alternative hypothesis, test statistic, P-value or critical value(s) then state the conclusion about the null hypothesis, as well as the final conclusion that addresses the original claim.

18. Denomination Effect A trial was conducted with 75 women in China given a 100-yuan bill, while another 75 women in China were given 100 yuan in the form of smaller bills (a 50-yuan bill plus two 20-yuan bills plus two 5-yuan bills). Among those given the single bill, 60 spent some or all of the money. Among those given the smaller bills, 68 spent some or all of the money (based on data from “The Denomination Effect,” by Raghubir and Srivastava, Journal of Consumer Research, Vol. 36). We want to use a 0.05 significance level to test the claim that when given a single large bill, a smaller proportion of women in China spend some or all of the money when compared to the proportion of women in China given the same amount in smaller bills.

a. Test the claim using a hypothesis test.

b. Test the claim by constructing an appropriate confidence interval.

c. If the significance level is changed to 0.01, does the conclusion change?