Question

A company believes that the average price of its new model is less than the claimed value of $11,500 (with a standard deviation of $700). A check of the sticker prices on 32 cars finds the average price is $11,200. At , test the belief .

Answer 1

Solution :

Solution :

= 11500  

= 11200

= 700

n = 32

The null and alternative hypothesis is ,

H0 :   = 11500

Ha : < 11500

This is the left tailed test .

Test statistic = z

= ( - ) / / n

= ( 11200 - 11500 ) / 700 / 32

= -2.42

The test statistic = -2.42

P-value = 0.0078

= 0.05

0.0078 < 0.05

P-value <

Reject the null hypothesis .

There is sufficient evidence to the test claim .