Question

The manager of an auto shop stated that the mean cost of an oil change is $40 or less. (6pts)

Circle the form of the hypotheses below that should be used to test the manager’s claim?

Comment on the conclusion when cannot be rejected.

Comment on the conclusion when can be rejected.

Answer 1

1) The correct hypothesis to test will be as stated

Ho: ≤ 40 and Ha: > 40

2) When Ho can't be rejected means:

i) There is not enough evidence to reject the claim under Ho

ii) This implies the claim that mean cost of an oil change is $ 40 or less can't be rejected.

3. When Ho can be rejected means:

i) There is enough evidence to reject the claim under Ho

ii) This implies the claim that mean cost of an oil change is $ 40 or less is rejected, i.e. the cost of an oil change is more than $ 40.