Study Types
Which study uses the same subjects twice?
Matched Pairs
What is the null hypothesis?
The null hypothesis states that there is no difference or no effect.
What is the formula for retail price?
What does "q" represent?
q represents the quantity of items produced or sold.
What is the profit formula?
P = Revenue - Expenses
Which study has subjects randomly assigned?
Experiment
z = ( x - u ) / ( o / sqrt(n) )
$20 item and $5 markup. What is the price?
$25
What is fixed costs vs variable costs?
Fixed costs: stays the same (ex: rent)
Variable costs: changes per items (ex: materials)
If R > E, what happens?
The company makes profit.
Which study observes without interfering?
Observational Study
What does it mean to reject Ho?
Rejecting Ho means there is enough evidence to support the alternative hypothesis.
200% markup means what?
200% markup means the markup is twice the original price.
Write an expense function.
E = (variable cost * q)+ fixed costs
Why might increasing price too much decrease profit?
Higher prices can reduce demand, leading to less revenue overall.
Why matched pairs reduces variability?
Because the same subjects are used, so individual differences are controlled.
If z is very large, what happens?
If z is very large (positive or negative), it falls in the rejection region, so we reject Ho.
An item costs $80 and is marked up 25%. What is the retail price?
$100
0.25 x 80 = $20
$80 + $20 = $100
What is average cost?
Average Cost = total cost / quantity
Why can profit decreases after a point?
It can be due to decreasing demand or increasing costs.
Testing the same students before and after drinking coffee to compare focus.
Matched Pair Study
If your z-score is 0, what does that tell you about your sample mean?
The sample mean is equal to the population mean.
If the retail price is $120 and the markup is $30, what was the wholesale cost?
120 - 30 = $90
What is Break-Even?
Break-even is when revenue = expenses (profit = 0)
Explain best pricing strategy.
Best pricing strategy is the price that maximizes profit, not just revenue.