It has been reported that the average credit card debtfor college seniors is $32

Question

It has been reported that the average credit card debtfor college seniors is $3262. The student senate at a largeuniversity feels that their seniors have a debt much less thanthis, so it conducts a study of 50 randomly selected seniors andfinds that the average debt is $2995 with a sample standarddeviation of $1100. With = 0.05, is the student senatecorrect? a. state the hypotheses and identify the claim b. find the critical value(s) c. compute the test value d. make the decision e. summarize the results It has been reported that the average credit card debtfor college seniors is $3262. The student senate at a largeuniversity feels that their seniors have a debt much less thanthis, so it conducts a study of 50 randomly selected seniors andfinds that the average debt is $2995 with a sample standarddeviation of $1100. With = 0.05, is the student senatecorrect? a. state the hypotheses and identify the claim b. find the critical value(s) c. compute the test value d. make the decision e. summarize the results

Explanation / Answer

If the mean of the 50 students is different, is it likely tobe different simply by chance? By chance, we mean 5%, By different, we mean that the TRUE mean is less than 3262(consider also the TWO TAIL test) Do you understand that standard deviation describes thespread? If the SD is 1100 and your difference is 3262-2995=267, thatis less than one SD. It is 267/1100 or 0.24 SD
Do you know about the normal distribution? Can you see thatthe 3262 is a plausible number, perhaps correct? DO you have the tables of the normaldistribution. http://www.math.unb.ca/~knight/utility/NormTble.htm You can look up the Z score and figure the PROBABILITY thatthe difference of 267 is due to chance

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