(a) At the 95% confidence level, test todetermine whether the measures taken by

Question

(a)    At the 95% confidence level, test todetermine whether the measures taken by the company were effectivein reducing the average price. use the six-stephypothesis-testing framework and write out the last threesteps in this table.

H : µ $1.25

H : µ $1.25

n = 49, = .05

(b)    What is the p-value associated with theabove sample result? _______________

(c)    What is the probability of committing aType II error, , if the actual price per gallon is $1.19 pergallon? _______________

H : µ $1.25

H : µ $1.25

n = 49, = .05

Explanation / Answer

Ho u=x

alternate hypothesis, H1: not equal x (two tails)

sample size, n = 49
sample mean, x = 120
sample standard deviation,s= 0.14
standard error, e = s/n = 14/49 =2

test statistics, z = (x-)/e = (120-125)/2 = -2.5

critical z for 0.1 significance from z table =-1.28
since test statistics is less than the critical -z, hence we rejectthe null hypothesis.     

     Now

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