5. The average amount spent on a new car in 2015 was $33,560 with a standard dev

Question

5. The average amount spent on a new car in 2015 was $33,560 with a standard deviation of $11,194. You just bought a new car for $18,422 and want to know if you got a good deal compared to the national average.

A. What are the independent and dependent variables and how are each scaled ?

            Independent:________________________            Scaling:_____________________________

            Dependent:__________________________            Scaling:_____________________________

B. What test should the students use?

E. What are that tests assumptions?  

H. If you calculate a test statistic of 1.97, should she?      Retain H0 Reject H0  

Explanation / Answer

Solution:

B) F test should be used.
E) The assumptions are:

1) The population from which the samples are collected must be normal and all must have same standard deviations.
2)The samples must be independent.
H) Test statistic = z = 1.97 and level of significance is not given we can take it 0.05

critical value = 1.96 Using z table.

critical value < test statistic we reject null hypothesis

Conclusion : She got a good deal compared to national average.

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