Question

The average gasoline price of one of the major oil companies has been hovering around $2.20 per gallon. Because of cost reduction measures, it is announced that there will be a significant reduction in the average price over the next month. In order to test this belief, we wait one month, then randomly select a sample of 36 of the company's gas stations. We find that the average price for the stations in the sample was $2.15. The standard deviation of the prices for the selected gas stations is $.10. Given that the test statistic for this sample is t = –3, determine the p-value.

(NOT USING EXCEL)

Answer 1

Solution :

= 2.20

=2.15

s =0.10

n = 36

This is the two tailed test .

The null and alternative hypothesis is ,

H₀ :    = 2.20

H_a :     2.20

Test statistic = t

= ( - ) / s / n

= (2.15 -2.20 ) / 0.10 / 36

= −3

Test statistic = t =  −3

P-value =0.0049