In: Statistics and Probability
A SAMPLE OF 16 EMPLOYEES WAS DRAWN FOR THE ANALYSIS OF THE AVERAGE BONUS EARNED LAST YEAR. ASSUME THAT THE INDIVIDUAL BONUS IS NORMALLY DISTRIBUTED WITH UNKNOWN PARAMETERS. SAMPLE SUMMARIES ARE: (SAMPLE MEAN) = $5,400 AND (SAMPLE STANDARD DEVIATION) = $1,280.
(A) AT THE 5% SIGNIFICANCE LEVEL, DO WE HAVE SUFFICIENT EVIDENCE THAT THE POPULATION AVERAGE BONUS WAS BELOW $6,000?
CIRCLE APPROPRIATE ANSWER: YES! NO!
(B) SHOW THE TEST STATISTIC VALUE, THE CRITICAL VALUE(S) NEEDED FOR YOUR DECISION AND FORMULATE THE REJECTION RULE.
TEST STATISTIC VALUE =
CRITICAL VALUE(S):
REJECTION RULE STATES...
(C) AT THE SAME 5% SIGNIFICANCE LEVEL, DO WE HAVE SUFFICIENT EVIDENCE THAT THE POPULATION AVERAGE BONUS EXCEEDED $4,900?
CIRCLE APPROPRIATE ANSWER: YES! NO!
(D) SHOW THE CRITICAL VALUE(S) NEEDED FOR YOUR DECISION AND FORMULATE THE REJECTION RULE.
TEST STATISTIC VALUE =
CRITICAL VALUE(S):
REJECTION RULE STATES...
1) H0: = 6000
H1: < 6000
The test statistic t = ()/(s/)
= (5400 - 6000)/(1280/)
= -1.875
At = 0.05, the critical value is t0.05, 15 = -1.753
Reject H0, if t < -1.753
Since the test statistic value is less than the critical value (-1.875 < -1.753), so we should reject the null hypothesis.
So at 5% significance level there is sufficient evidence that the population average bonus was below 6000
2) H0: = 4900
H1: > 4900
The test statistic t = ()/(s/)
= (5400 - 4900)/(1280/)
= 1.563
At = 0.05, the critical value is t0.05, 15 = 1.753
Reject H0, if t > 1.753
Since the test statistic value is not greater than the critical value (1.563 < 1.753), so we should not reject the null hypothesis.
So at 5% significance level there is not sufficient evidence that the population average bonus exceeded 4900.