Statistics solution for comparison of critical value:

The director of admissions at the University of Maryland, University College is concerned about the high cost of textbooks for the students each semester. A sample of 75 students enrolled in the university indicates that X (bar) = $285.4 and s = $42.20. a. Using the 0.05 level of significance, is there evidence that the population mean is above $300? b. What is your answer in (a) if s = $90 and the 0.10 level of significance is used? c. What is your answer in (a) if X (bar) = $310.10 and s = $40.20? d. Based on the information in part (a), what decision should the director make about the books used for the courses if the goal is to keep the cost below $300? Solution: Data: n 75 300 s 42.2 x-bar 285.4 (1) Formulate the hypotheses: Ho: The population mean is not above 300, that is Ha: The population mean is above 300, that is > (2) Decide the test statistic and the level of significance: t (Right-tailed), = Degrees of freedom, n-1 = Critical t- score = (3) State the decision Rule: Reject Ho if t > 1.6657 0.05 74 1.6657 300 300

(4) Calculate the value of test statistic: SE = s/n = t = (x-bar - )/SE = 4.8728 -2.9962

(5) Compare with the critical value and make a decision: Since -2.9962 < 1.6657 we fail to reject Ho

Decision: We can conclude that that the population mean is not above 300. Data: n s x-bar

75 300 40.2 285.4

(1) Formulate the hypotheses: Ho: The population mean is not above 300, that is Ha: The population mean is above 300, that is > (2) Decide the test statistic and the level of significance: t (Right-tailed), = Degrees of freedom, n-1 = Critical t- score = (3) State the decision Rule: Reject Ho if t > 1.6657 0.05 74 1.6657 300 300

(4) Calculate the value of test statistic: SE = s/n = z = (x-bar - )/SE = 4.6419 -3.1453

(5) Compare with the critical value and make a decision: Since -3.1453 < 1.6657 we fail to reject Ho

Decision: We can conclude that that the population mean is not above 300. Data: n

75 300

s x-bar

40.2 310.1

(1) Formulate the hypotheses: Ho: The population mean is not above 300, that is Ha: The population mean is above 300, that is > (2) Decide the test statistic and the level of significance: t (Right-tailed), = Degrees of freedom, n-1 = Critical t- score = (3) State the decision Rule: Reject Ho if t > 1.2931 0.1 74 1.2931 300 300

(4) Calculate the value of test statistic: SE = s/n = z = (x-bar - )/SE = 4.6419 2.1758

(5) Compare with the critical value and make a decision: Since 2.1758 > 1.2931 we reject Ho

Decision: We can conclude that that the The population mean is not above 300. At the 0.05 confidence level, there is not evidence that the books currently used do not meet his objective.

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