5. Hypothesis testing and interval estimation Aa Aa Consumers with at least one

Question

5. Hypothesis testing and interval estimation Aa Aa Consumers with at least one credit card have a mean of 4.84 credit cards. [Source: Sumit Agarwal, John C. Driscol, Xavier Gabaix, and David Laibson, "Learning in the Credit Card Market," Working Paper 13822, National Bureau of Economic Research (NBER),ebruary 2008.] You want to test the hypothesis that the mean number of credit cards held by high-income consumers (consumers with annual incomes over $100,000) is different from the reported mean of 4.84. A random sample of 300 high-income consumers provides a sample mean number of credit cards of x = 4.97. Use a significance level of -.01 for the test. Use a confidence interval estimate approach to conduct the hypothesis test. To use a confidence interval estimate approach to conduct the hypothesis test, you construct the interval estimate of the population mean. confidence Use the Distributions tool to help answer the questions that follow. Select a Distribution Distributions

Explanation / Answer

1)to use a confidence ................you construct the 99% confidence interval estimate ................

2) for std error of mean =std deviation/(n)1/2 =3.56/(300)1/2 =0.2055

for 99% CI ; z=2.5758

hence confidence interval estimate =sample mean -/+ z*std error =4.4406 to 5.4994

since the confidence inerval estimate contians 4.84 ; the null hypothesis............by high-income consumers is 4.84) is retained

( Note : please provide if there are any options provided for the last blanks)

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