Question

In one of your classes, the professor told you that average GDP among industrialized

countries is $14,200 (14.2 in $1000s). You believe the information your professor has

is incorrect and outdated, so you decide to collect your own data. The results of a

sample reveal that the average GDP per capita (in $1000s) among 123 industrialized

countries is calculated to be 13.6 with a standard error of .45.

(a) If you hypothesize that your professor is incorrect and that average GDP per

capita among industrialized countries is

not

$14,200, write out the appropriate

null and alternative hypotheses.

(b) Calculate a 90% confidence interval. Based on the results, would you reject or

accept the null hypothesis?

(c) Based on the values above, the test statistic is -.51. Using a two-tailed test of

significance and an

α

of .05, can you reject the null hypothesis? Also, calculate

the corresponding p-value and interpret.

Answer 1

(a) Hypothesis : Vs

(b) The 90% confidence interval is ,

i.e. ($12718 , $14782)

Here , the value lies in the 90% confidence interval

Therefore , accept the null hypothesis.

(c) P-value =

Decision : Here , P-value > 0.05

Therefore , accept the null hypothesis

Interpretation : Hence , there is not sufficient evidence to conclude that the average GDP per capita among industrialized countries is not equals to $14,200.