Question

According to a 2010 Business Week article, the average 401(k) account balance for individuals nearing retirement was $62,500. To test if this average has recently changed, suppose a sample of 40 people starting retirement was selected and it found that the average 401(k) balance was $65,775. Assume the population standard deviation was $22,225. Using an α = .05, answer the following:

a. State the null and alternative hypotheses.

b. What conclusions can be made about the current average balance of 401(k) accounts for    people nearing retirement?

c. Determine the p-value for this test and interpret its meaning.

d. Repeat the preceding hypothesis test using the critical value approach.

Answer 1