Question

In: Statistics and Probability

A recent study on state income tax payments found that the average person paid $7,500 each...

A recent study on state income tax payments found that the average person paid $7,500 each year with a standard deviation of $250.20. After multiple propositions by local experts, a change was implemented to reduce this tax burden. Suppose a random sample of 240 people was taken after the proposed changes and these individuals exhibited a mean tax payment of $7,425.

  1. What would a 95% confidence interval for the population mean be? [Show your code in “R Code” section. Show the answer in “Answer” section. Leave “Comments” section blank.]
  2. What would it suggest with regards to whether they have properly reduced the tax burden? Why? [Leave “R Code” and “Answer” sections blank. Include the phrase “reduced” or “did not reduce” along with a justification in a few sentences in “Comments” section.]

Solutions

Expert Solution

The detailed R code and explanation are given below

We see that the 95% confidence interval is (7386.2392, 7463.7608) which is well below the previous mean of 7500, hence we can conclude that they have properly reduced the tax burden

orchestra answered 1 year ago
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