Question

In 2004, the mean household expenditure on gasoline and motor oil was $1773, according to data obtained from the U.S. Energy Information Administration. An economist wanted to know whether this amount has changed significantly from its 2004 level. In a random sample of 1750 households, he found the mean expenditure (in 2004 dollars) on gasoline and motor oil during the most recent year to be $1803, with a standard deviation of $468. Do these results suggest the amount spend on gasoline and motor oil in a household has significantly changed since 2004? Use the 0.05 level of statistical significance.

Answer 1

Solution:

This is a two tailed test.

The null and alternative hypothesis is,

Ho: 1773

Ha: 1773

The test statistics,

t =( - )/ (s /n)

= ( 1750 - 1773 ) / ( 468 / 1750 )

= -2.056

P-value = 0.0399

The p-value is p = 0.0399 < 0.05, it is concluded that the null hypothesis is rejected.

There is sufficient evidence to claim that the amount spend on gasoline and motor oil in a household has significantly changed since 2004? Use the 0.05 level of statistical significance.