An auto manufacturing company wants to estimate the variance of miles per gallon

Question

An auto manufacturing company wants to estimate the variance of miles per gallon for its auto model AST72. A random sample of 24 cars of this model showed that the standard deviation of miles per gallon is 0.58. At the alpha = 1%, can the research department conclude that the population variance of miless per gallon for AST72 is decreased from historical value of 0.35?

Select one:

A. At alpha = 1%, they reject the null hypothesis. The variance of miles per gallon for AST72 model has not decreased from the historical value of 0.35.

B. At alpha = 1%, they failed to reject the null hypothesis. The variance of miles per gallon for AST72 model has not decreased from the historical value of 0.35.

C. At alpha = 1%, they failed to reject the null hypothesis. The variance of miles per gallon for AST72 model has decreased from the historical value of 0.35.

D. At alpha = 1%, they reject the null hypothesis. The variance of miles per gallon for AST72 model has not decreased from the historical value of 0.35.

Explanation / Answer

At alpha = 1%, they failed to reject the null hypothesis. The variance of miles per gallon for AST72 model has decreased from the historical value of 0.35.

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