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It was reported that 5% of adults over the age of 55 have a problem with gamblin

ID: 3157076 • Letter: I

Question

It was reported that 5% of adults over the age of 55 have a problem with gambling, but one researcher believes the proportion is actually higher in her state. She wants to test the hypotheses H_0: p = 0.05 versus the alternative H_A: p > 0.05. If in a random sample of n=942 people over the age of 55, she found that 60 had a problem with gambling. Compute the p-value for this test and use it to make a conclusion at the 1% level of significance. Calculated Test Statistic: p-value: Decision: Conclusion: Compute the probability of type II error if the true proportion of adults with a gambling problem is actually 7%.

Explanation / Answer

1.

a)

Formulating the null and alternatuve hypotheses,          
          
Ho:   p   <=   0.05
Ha:   p   >   0.05
As we see, the hypothesized po =   0.05      
Getting the point estimate of p, p^,          
          
p^ = x / n =    0.063694268      
          
Getting the standard error of p^, sp,          
          
sp = sqrt[po (1 - po)/n] =    0.00710103      
          
Getting the z statistic,          
          
z = (p^ - po)/sp =    1.928490279   [ANSWER, TEST STATISTIC]

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As this is a    1   tailed test, then, getting the p value,  
          
p =    0.026897086   [ANSWER, P VALUE]

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As P > 0.01, we   FAIL TO REJECT THE NULL HYPOTHESIS.   [DECISION]

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Hence, there is no significant evidence at 0.01 level that more than 5% of adults over the age of 55 have a problem with gambling. [CONCLUSION]

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