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Annual expenditures for prescription drugs was $838 per person in the Northeast of the country. A...

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Statistics

Annual expenditures for prescription drugs was $838 per personin the Northeast of the country. A sample of 60 individuals in theMidwest showed a per person annual expenditure for prescriptiondrugs of $745. Suppose the population standard deviation is $300.Follow the steps below to develop a hypothesis test to determinewhether the sample data support the conclusion that the populationannual expenditure for prescription drugs per person is lower inthe Midwest than in the Northeast.

  1. Formulate the null and alternative hypotheses.  Statewhether this is a one-tailed test (and if so, upper or lower tail)or a two-tailed test.
  2. Suppose the significance level is . Explain what thismeans.
  3. Calculate the test statistic. (Hint: Is  known orunknown?)
  4. Calculate the p-value and make a decision to eitherreject  or to fail to reject .
  5. Calculate the critical value(s). Use the test statistic then tomake a decision to either reject  or to fail to reject.
  6. State what your decision means in the contextof the problem (prescription expenditure in the Midwest vs. theNortheast).

Answer & Explanation Solved by verified expert
4.1 Ratings (784 Votes)
Given 838 n 60 745 300HypothesisHo 838Ha 838 One tailedtest Lower    See Answer
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