Question

In 2001, the mean household expenditure for energy was $1493, according to data from the U.S. Energy Information Administration. An economist wants to test whether this amount has changed significantly from its 2001 level. In a random sample of 35 households, he found the mean expenditure for energy during the most recent year to be $1618, with a standard deviation $321. Conduct a hypothesis test at 10% significance level to see whether we have strong evidence to support the economist’s hypothesis.

What's your decision?

Answer 1

Solution :

= 1493

=1618

S =321

n = 35

This is the two tailed test .

The null and alternative hypothesis is ,

H0 :    = 1493

Ha :     1493

Test statistic = t

= ( - ) / S / n

= (1618 -1493) /321 / 35

= 2.304

Test statistic = t = 2.304

P-value =0.0275

= 0.10  

P-value <

0.0275 < 0.10

Reject the null hypothesis .

There is sufficient evidence to suggest that