The last time we looked at prices of 8 pairs of Payless sandals to find that:

1. The average price for each pair is $20.625

2. Standard deviation is $ 6.3

Suppose in our school, each person on average spends $25 on a pair of sandal. Is the price of sandals at Payless significantly cheaper than the average price we pay? (Use hypothesis testing with 95% level of confidence)

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ReplyDelete1/H0 µ=25

ReplyDeleteHA µ≠25

2/ se= 6.3/sprt(8)= 2.227

3/ 95% level of confidence=> .05

Degree of confidence: 8-1=7

One-tailed test

=>t= 1.895

=>critical region: µHo –t*se= 25-1.895*2.227= 20.78 > 20.625

4/ Reject null hypothesis. The price of payless shoes is significantly cheaper than $25, the average amount we spend.