Question

The mean annual incomes of certified welders are normally distributed with the mean of $75,000 and a population standard deviation of $3,500. The ship building association wishes to find out whether their welders earn more or less than $75,000 annually. The alternate hypothesis is that the mean is not $75,000. If the level of significance is 0.01, what is the critical value?

±2.576

−2.576

±1.645

+1.645

Answer 1

Solution :-

Given :-  The alternate hypothesis is that the mean is not $75,000

The above statement indicate that the test is a two tailed test.

Hypothesis :-

Ho : u = 75000

H1 : u 75000  

( Two tailed test )

At 0.01 significance level ' z ' is,

= 0.01

/ 2 = 0.01 / 2

/ 2 = 0.005

z / 2 = 2.576

Therefore Critical value at = 0.01 for two tailed test is =   2.576