Question

An economist wants to determine whether individuals in Massachusetts make a higher salary that individuals in the rest of the nation. Assume that the average salary for individuals in the nation is Normally distributed N($41,000, $3000). That is, the population mean is $41,000 and the population standard deviation is $3000.

The economist takes a sample of 25 individuals from Massachusetts and finds that the average salary is $44,000. Does the economist have statistically significant evidence to show that individuals in Massachusetts make more money that individuals in the rest of the nation? Assume alpha = 0.05

1. State the null and alternative hypothesis

2. Set alpha

3. Compute the Test Statistic

4. Determine p-value

5. Conclude (Select either: Reject the Null OR Fail to Reject the Null)

Answer 1

ANSWERS:

Z-test for One Population Mean:

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Ans 1)

Here alpha = 0.05

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Ans 2)

Test Statistic = 5

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Ans 3)

P-value = 0

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Ans 4)

Null hypothesis is rejected.

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