Question

Exercise 11-25 (LO11-2)

A cell phone company offers two plans to its subscribers. At the time new subscribers sign up, they are asked to provide some demographic information. The mean yearly income for a sample of 40 subscribers to Plan A is $45,000 with a standard deviation of $9,200. For a sample of 25 subscribers to Plan B, the mean income is $64,300 with a standard deviation of $7,100.

At the 0.025 significance level, is it reasonable to conclude the mean income of those selecting Plan B is larger? Assume unequal population standard deviations. Hint: For the calculations, assume the Plan A as the first sample.

1. What is the decision rule? (Negative amount should be indicated by a minus sign. Round your answer to 3 decimal places.)

2. Compute the value of the test statistic. (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.)

3. What is your decision regarding H₀ ?

• Reject H₀

• Fail to reject H₀

4. Compute the p-value.

• Less than 0.01

• Between 0.01 and 0.025

• Between 0.025 and 0.05

• Between 0.05 and 0.10

• Greater than 0.10

Answer 1