b. Let subscript 1 correspond to Finance majors and subscript 2 correspond to Marketing majors.

Let µi , σi2 , X̄i and s2i , such that i ∈ {1, 2}, denote the population average annual starting salaries,
population variances, sample average annual starting salaries and sample variances respectively.
The number of observations n1 = n2 = 50.
X̄1 = 42206; X̄2 = 37196; s21 = 3438716.57; s22 = 6148905.80;
It is logical to first conduct a test for equality of the two population variances before choosing the
appropriate test for the difference of the two population means. The hypotheses are given by:
H0 : σ12 = σ22
Ha : σ12 6= σ22
The F -test statistic is given by:

s22
F = = 1.79 (2)
s21

Note that, in the F -statistic, we keep the larger sample variance in the numerator. The numerator
degrees of freedom and denominator degrees of freedom are both n2 − 1 = n1 − 1 = 49.
At level of significance α = 0.05, the right tailed critical value Fcrit = 1.76. Fstat = 1.79 ≥ Fcrit = 1.76.
Therefore, we reject the null hypothesis at 5% level of significance. There is enough evidence that the
variances are unequal.
The p-value of this F -test is twice the right-tailed probability beyond 1.79 under the F -distribution
with numerator and denomination degrees of freedom equal to 49. Therefore, p-value = 0.044. We
reject the null hypothesis of equal population variances at α = 0.05 level of significance.
Since we have evidence that the population variances are unequal, we cannot use the pooled sample
variance approach for testing the difference of two population means.
The hypotheses for the testing of difference of the two population means are given by:
H0 : µ1 − µ2 ≤ 0
Ha : µ1 − µ2 > 0
The t-test statistic is given by:

X̄1 − X̄2
t= q 2 = 11.44 (3)
s1 s22
n1 + n2

The degrees of freedom of the t-statistic is given by:

2
s21 s22

n1 + n2
df =  2 2  2 = 90.75 ≈ 90 rounded down (4)
1 s1 s22
n1 −1 n1 + n21−1 n2

At level of significance α = 0.05, the right tailed critical value tcrit = 1.66. tstat = 11.44 ≥ tcrit = 1.66.
Therefore, we reject the null hypothesis at 5% level of significance. There is enough evidence that the
average annual starting salary of Finance majors is greater than that of Marketing majors.
The p-value for this right-tailed test is 1.52 × 10−19 , which is very low. Therefore, we reject the null
hypothesis even at 1% level of significance. There is enough evidence that the average annual starting
salary of Finance majors is greater than that of Marketing majors.
The pooled sample variance approach, which assumes that the population standard deviations are
equal, would have also yielded the same conclusion even though it is technically not suitable for this
situation. If we follow this approach, the pooled sample variance is given by:

(n1 − 1) s21 + (n2 − 1) s22

s2p = = 4793811.19 (5)
n1 + n2 − 2