Although union and non union wages tend to rise at the same ratein the long run, union wages usually advance faster duringrecessions and early in period of recovery, and non union wagestend to advance more rapidly later in the business cycle when thelabor markets are tight. To examine this issue, an economistrecords the hourly wages (including employee benefits) of employeeswith two years experience for twelve chosen consumer productsmanufacturing firms. Six non union shops and six consumermanufacturing firms with union shops. The data (in dollars) are asfollows:
Non union shops: 8.26, 8.17, 8.45, 9.09, 8.85, 8.31
Union shops: 7.92, 8.39, 8.64, 8.04, 8.24, 8.25
A) At 5% level of significance, does the data suggest that theunion and non-union wages differ, on the average, for employeeswith two years experience in the consumer products manufacturingindustry? Show all necessary work.
B) What type of error is possible and describe this error interms of the problem?
C) Estimate the difference between the actual average wages ofunion and non-union employees with two years experience in theconsumer products manufacturing industry using a 90% confidenceinterval. Does the data suggest that there is sufficient evidenceof a difference in the actual average wage of union and non-unionemployees with 2 years experience in the consumer productsmanufacturing industry? Show all necessary work.
D) Interpret the interval estimation.
