Question

Individuals filing federal income tax returns prior to March 31 had an average refund of $1102. Consider the population of “last-minute” filers who mail their returns during the last five days of the income tax period (typically April 10 to April 15). a. A researcher suggests that one of the reasons that individuals wait until the last five days to file their returns is that on average those individuals have a lower refund than early filers. Develop appropriate hypotheses such that rejection of H0 will support the researcher’s contention. b. For a sample of 600 individuals who filed a return between April 10 and April 15, the sample mean refund was $1050 and the standard deviation was $500. Compute the p-value. c. Using α = 0.05, what is your conclusion? d. Test the hypotheses using the critical value approach (α = 0.025).

Answer 1

Solution:

Given that:

. Individuals filing federal income tax returns prior to March 31 had an average refund of $1102.

  the population of “last-minute” filers who mail their returns during the last five days of the income tax period (typically April 10 to April 15).