SOLUTION: An IRS representative claims that the average deduction for medical care is $1250. A taxpayer who believes that the real figure is lower, samples 12 families he finds a mean of $93

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Question 303632: An IRS representative claims that the average deduction for medical care is $1250. A taxpayer who believes that the real figure is lower, samples 12 families he finds a mean of $934. and a standad deviation of $616. Should his calim be rejected at the 5% significance level?
Please help...Not sure wat to do.
Answer by stanbon(75887) About Me  (Show Source):
You can put this solution on YOUR website!
An IRS representative claims that the average deduction for medical care is $1250. A taxpayer who believes that the real figure is lower, samples 12 families he finds a mean of $934. and a standad deviation of $616. Should his calim be rejected at the 5% significance level?
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Ho: u = 1250
Ha: u < 1250 (claim)
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Test Statistic: t(934) = (934-1250)/[616/sqrt(12)] = -1.777
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p-value = P(t < -1.777 when df = 11) = 0.0516
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Conclusion: Since the p-value is greater than 5%, fail to reject Ho.
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Cheers,
Stan H.