A bank wonders whether omitting the annual credit card fee for customers who cha

Question

A bank wonders whether omitting the annual credit card fee for customers who charge at least $2400 in a year will increase the amount charged on its credit cards. The bank makes this offer to a simple random sample of 200 of its credit card customers. It then compares how much these customers charge this year with the amount that they charged last year. The mean increase in the sample was $332 and the standard deviation was $108.

b) Give a 99% confidence interval for the mean amount of the increase.

Explanation / Answer

Ho : miu = 2400

Ha : miu > 2400

t = ( 2400+332 - 2400 ) / ( 108 / srqt 200 )

t = 43.47

p value : 0.00000

since p valuw is lower tahn alpha we reject Ho and conclude that mean amount charged increase under the no fee offer

confidence interval

alpha / 2= 0.005 Z= 2.57

332 +/- 2.57 * 108 / srqt 200

332 +/- 19.63

312.37 < miu < 351.63

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