Question

A gas utility company advertises that the average waiting time for home service installation has normal distribution with at the most two weeks with standard deviation 3 days. However a randomly surveyed 9 homeowners shows the average waiting time for service installation 18 days. At α (alpha)=0.01, to verify company’s advertisement the critical value of the test statistic that can be used:

d. Zα =-1.64

b. Zα =-2.58

c. c2α = 6.65

d. Zα =-2.33

Answer 1

Given that a gas utility company advertises that the average waiting time for home service installation has a normal distribution with at the most two weeks i,e mean <= 14.

Thus based on the company claim the hypothesis is a one-tailed test and given that the distribution is normal hence the Z score is applicable for hypothesis testing.

The critical value at given significance level 0.01 and given type of hypothesis the critical score is calculated by using the excel formula for normal distribution which is =NORM.S.INV(0.01), thus the Zc is computed as:

d). Zc = -2.33

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