1 2 3 4 5 678 9 10 Question 2 of 10 (1 point) Attempt 1 of 1 | View question in

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1 2 3 4 5 678 9 10 Question 2 of 10 (1 point) Attempt 1 of 1 | View question in a popup | th 27m Remaining 9.3 Section Exercise 18 (p-value, calc) Good credit: The Fair Isaac Corporation (FICO) credit score is used by banks and other lenders to determine whether someone is a good credit risk. Scores range from 300 to 850, with a score of 720 or more indicating that a person is a very good credit risk. An economist wants to determine whether the mean FICO score is more than the cutoff of 720. She finds that a random sample of 90 people had a mean FICO score of 730 with a standard deviation of 91. Can the economist conclude that the mean FICO score is greater than 720? Use the ?-0.05 level of significance and the P-value method with the TI-84 Plus calculator. Part: 0/4 Part 1 of 4 State the appropriate null and alternate hypotheses. This hypothesis test is a (Choose one) test ?

Explanation / Answer

Solution:

Here, we have to use one sample t test for population mean.

The null and alternative hypothesis for this test is given as below:

Null hypothesis: H0: The mean FICO score is 720.

Alternative hypothesis: H1: The mean FICO score is greater than 720.

H0: µ = 720

H1: µ > 720

(One tailed/upper tailed/right tailed)

We are given

Xbar = 730

S = 91

n = 90

? = 0.05

df = n – 1 = 90 – 1 = 89

Test statistic = t = (Xbar - µ) / [S/sqrt(n)]

Test statistic = t = (730 – 720)/[91/sqrt(90)]

Test statistic = t = 1.0425

P-value = 0.1500

(by using t-table)

P-value > ? = 0.05

So, we do not reject the null hypothesis that the mean FICO score is 720.

There is insufficient evidence to conclude that the mean FICO score is greater than 720.

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