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Business and Management
There has been considerable discussion about dairy policy and the price of milk in the United States. A recent report compared the Federal Agriculture Reform and Risk Management Act of 2013 (DSA) and the Dairy Freedom Act (DFA) on the price of milk (in dollars per cwt). A random sample of months was selected, and the price of milk was recorded for each.17 Assume the distribution of pairwise differences is continuous and symmetric.
a. Conduct a sign test to determine whether there is any evidence of a difference in the median milk prices under the two different pricing policies. Use a = 0.05.
b. Conduct a signed-rank test to determine whether there is any evidence of a difference in the median milk prices under the two different pricing policies. Use a = 0.05.
c. Compare your conclusions in parts (a) and (b). Which test do you think is more accurate? Why?
d. If you were a dairy farmer, which pricing policy would you prefer? Why?
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