Using basic demographic information (age, household income, marital status, etc.

Question

Using basic demographic information (age, household income, marital status, etc.), you collect a random sample size 184 customers who accepted a special balance transfer offer from a major credit card company six months ago. The company wants to determine if there is evidence that it would profit by offering the deal to the population of customers with those same demographic characteristics. The sample mean balance transfer amount is 1,790 with a sample standard deviation of 483.

Based on the information above, if the company were to perform a hypothesis test at = 0.05, what is the largest value it could specify in the null hypothesis and still fail to reject the null hypothesis?

Explanation / Answer

That value, let it be X

Sample mean = 1790

Sample stdev = 483

n =184

alpha = .05

Z = (X-1790)/(483/sqrt(184)) = 1.96

X = 1970+1.96*484/sqrt(184)

X=2039.935

So, the actual value is any number less than 2039.935.

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