Exhibit 7 The average gasoline price of one of the major oil companies has been

Question

Exhibit 7

The average gasoline price of one of the major oil companies has been $2.20 per gallon. Because of cost reduction measures, it is believed that there has been a significant reduction in the average price. In order to test this belief, we randomly selected a sample of 36 of the company's gas stations and determined that the average price for the stations in the sample was $2.14. Assume that the standard deviation of the population (s) is $0.12. At 88% confidence, test the company’s claim. The hypothesis are:

Refer to Exhibit 7. If the test is done at 88% confidence, the null hypothesis should

a) not be rejected

b) be rejected

c) not enough information is given to answer this question

d) none of these alternatives is correct

Explanation / Answer

Exhibit 7 The average gasoline price of one of the major oil companies has been

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