Question

Cost of Rehabilitation The Medical Rehabilitation Education Foundation reports that the average cost of rehabilitation for stroke victims is $24,672. To see if the average cost of rehabilitation is lower at a particular hospital, a researcher selects a random sample of 49 stroke victims at one particular hospital and finds that the average cost of their rehabilitation is $23,800. The standard deviation of the population is $3251. At α = 0.004, can it be concluded that the average cost of stroke rehabilitation at the hospital is below $24,672? Source: Snapshot, USA TODAY. Do not use the P-value method. Get 0 point if use the P-value method.

Answer 1

Since the population standard deviation is known and the sample size is greater than 30, we use z-test.

The null and alternative hypothesis are given by,

The test statistic is given by,

It is given that .

Then from t-table, we can find the value of (that is, the last row of t-table)

That is,

We reject Ho if .

Here, . That is, .

Hence we may accept H0.

That is, it is not possible to conclude that the average cost of stroke rehabilitation at the hospital is below $24672.