Question

The number of "destination weddings" has skyrocketed in recent years. For example, many couples are opting to have their weddings in the Caribbean. A Caribbean vacation resort recently advertised in Bride Magazine that the cost of a Caribbean wedding was less than $30,000. Listed below is a total cost in $000 for a sample of 8 Caribbean weddings. At the 0.01 significance level, is it reasonable to conclude the mean wedding cost is less than $30,000 as advertised?

28.3, 31.4, 29.4, 29.7, 29.6, 28.9, 30.7

2. State the decision rule for 0.01 significance level. (Negative amount should be indicated by a minus sign. Round your answer to 3 decimal places.)
3. Compute the value of the test statistic. (Negative amount should be indicated by a minus sign. Round your answer to 3 decimal places.)

Answer 1

ho: mean wedding cost is equal to $30,000 as advertised
h1: mean wedding cost is less than $30,000 as advertised
1)
critical value, -t(a,n-1) = -t(0.01,7-1)
-t(a,n-1) = -3.143
the decision rule for 0.01 significance level is to reject ho if -t < -3.143

2)
mean=   29.71    [Excel function used -> AVERAGE]
sd=   1.048    [Excel function used -> STDEV]
u=   67.00   
n=   7.00    [Excel function used -> COUNT]
alpha=   1%  

test statistic, t = (mean-u)/(sd/sqrt(n))
t = (29.7142857142857-67)/(1.0479/sqrt(7))
t = -94.1394

Since -t < -t(a,n-1), i reject ho and conclude that mean wedding cost is less than $30,000 as advertised