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Economics and Finance
The U.S. Internal Revenue Service estimates that the average taxpayer takes approximately six hours to complete Form 1040. A study was conducted to examine the amount of time it takes to complete this dreaded form, by income level. Independent random samples of federal filers in two income ranges were obtained, and the length of time (in hours) to complete Form 1040 was recorded for each. The summary statistics are given in the following table.
Assume the underlying populations are normal.
a. Conduct an F test to determine whether there is any evidence that the two population variances are different. Use a = 0.02.
b. Using your conclusion from part (a), conduct the appropriate test for evidence that the mean time to complete Form 1040 for the lower-income level is less than the mean time for the higher-income level. Use a = 0.05. State your conclusion and find bounds on the p value.
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