Question

A business school has a goal that the average number of years of work experience of its MBA applicants is more than three years. Historical data suggest that the variance has been constant at around six months, and thus, the population variance can be assumed to be known. Based on last year’s applicants, it was found that among a sample of 47, the average number of years of work experience is 3.1. Can the school state emphatically that it is meeting its goal? Formulate the appropriate hypothesis test and conduct the test.

Answer 1

Sample size = n = 47

Sample mean = = 3.1 Years

Variance = = 6/12 = 0.5 Years

Population standard deviation = = 0.7071

Claim: The average number of years of work experience of its MBA applicants is more than three years.

The null and alternative hypothesis is

Level of significance = 0.05

Here population standard deviation is known so we have to use z-test statistic.

Test statistic is

Critical value = 1.64 ( Using z table)

Critical value > Test statistic | z | we fail to reject the null hypothesis.

Conclusion:

The average number of years of work experience of its MBA applicants is NOT more than three years.