Question

Employees of a big service company have an average wage of $7.00 per hour with a standard deviation of $0.50. The military industry has 64 employees of a certain ethnical group that have an average wage of $6.90 per hour. Is it resonable to suppose that the wage of the ethnical group is equivalent to that of the random sample taken from the employees from the military industry.

Answer 1

Result:

Employees of a big service company have an average wage of $7.00 per hour with a standard deviation of $0.50. The military industry has 64 employees of a certain ethnical group that have an average wage of $6.90 per hour. Is it reasonable to suppose that the wage of the ethnical group is equivalent to that of the random sample taken from the employees from the military industry.

Standard error = sd/sqrt(n) = 0.5/sqrt(64) =0.0625

Z value for 6.9, z =(6.9-7.0)/0.0625 = -1.6

This calculated z value is with in the limit of -2 z value and +x-2 z value.

Therefore it is reasonable to suppose that the wage of the ethnical group is equivalent to that of the random sample taken from the employees from the military industry.

Hypothesis testing approach at 5% level.

Z Test of Hypothesis for the Mean
Data
Null Hypothesis                       m=	7
Level of Significance	0.05
Population Standard Deviation	0.5
Sample Size	64
Sample Mean	6.9
Intermediate Calculations
Standard Error of the Mean	0.0625
Z Test Statistic	-1.6000
Two-Tail Test
Lower Critical Value	-1.9600
Upper Critical Value	1.9600
p-Value	0.1096
Do not reject the null hypothesis