Question

You want to test the hypothesis that the average NYU student spends no more than $600...

You want to test the hypothesis that the average NYU student spends no more than $600 on subway fares per academic year. You happen to know that variance in sub- way fare spending is $900. You plan to test this hypothesis by asking n students to 2 track their subway expenses over the course of the academic. If you have a significance level of .01, how many students would you have to track to have a 90% chance of rejecting the null hypothesis when the average subway spending is actually $620. (It is a one-sided hypothesis test with H0: μ = $600 and H1: μ > $600)

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Answer #1

The null and alternate hypothesis are:

H0:

Ha:

Since this is a right tailed test, so the critial region is given by:

We know that,

----(1)

Also,

----(2)

Solving (1) and (2), we get,

which is the required number of students to be tracked.

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