Question
An economist is asked to estimate the average duration of unemployment (measured in months) in a...
An economist is asked to estimate the average duration of unemployment (measured in months) in a population. From a random sample of 9 spells of unemployment, she finds a sample average duration of 8. Suppose that she knows the population standard deviation of spells is σ = 3.
(a) Find a 90% confidence interval for the population average duration. (b)TestH0 : μ=7againstHA : μ>7withα=0.05.
(c) If the true (but unknown) average duration is in fact μ = 8 then what is the power of the test in part (b)?
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