1. Describe in full sentences the hypothesis testing steps & provide an example to solve by using hypothesis testing.
The random variable is the sampling distribution of sample mean cost of a Starbucks Grande Caffe Latte for sample size n=10.
Test is two tailed.
Since population standard deviation is known so standard normal distribution will be used.
The test statistics is
The p-value is
p-value =2P(z < -1.92) = 0.0548
Since p-value is greater than so we fail to reject the null hypothesis.
The p-value is greater than .
Conclusion: There is evidence to conlcude that the mean cost of a Starbucks Grande Caffe Latte is $3.65.
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