Question

The Economist collects data each year on the price of a Big Mac in various countries around the world. A sample of McDonald's restaurants in Europe in July 2016 resulted in the following Big Mac prices (after conversion to U.S. dollars).

4.45	3.18	2.42	3.96	4.33	4.53
4.16	3.68	4.63	3.80	3.33	3.85

The mean price of a Big Mac in the U.S. in July 2016 was $5.04. For purposes of this exercise, you can assume it is reasonable to regard the sample as representative of European McDonald's restaurants. Does the sample provide convincing evidence that the mean July 2016 price of a Big Mac in Europe is less than the reported U.S. price? Test the relevant hypotheses using

α = 0.05.

(Hint: See Example 12.12.)

Find the test statistic and P-value. (Use a table or technology. Round your test statistic to one decimal place and your P-value to three decimal places.)

t=  

P-value = 0.000

State the conclusion in the problem context.

We reject H₀. We have convincing evidence that the mean July 2016 price of a Big Mac in Europe is less than the reported U.S. price.

Answer 1

Let denotes the mean July 2016 price of a Big Mac in Europe.

We reject H₀. We have convincing evidence that the mean July 2016 price of a Big Mac in Europe is less than the reported U.S. price.