Question 668364: The manager of the credit department for an oil company would like to determine whether the average monthly balance of credit card holders is higher than Php 3,000. An auditor randomly samples 150 accounts and finds that the average owed is Php 4,170 with a standard deviation of P1,182.50. using the 0.05 level of significance, can the auditor conclude that there is evidence that the average monthly balance is really higher than Php 3,000?
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! The manager of the credit department for an oil company would like to determine whether the average monthly balance of credit card holders is higher than Php 3,000. An auditor randomly samples 150 accounts and finds that the average owed is Php 4,170 with a standard deviation of P1,182.50. using the 0.05 level of significance, can the auditor conclude that there is evidence that the average monthly balance is really higher than Php 3,000?
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Ho: u <= 3000
Ha: u > 3000 (?)
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x-bar = 4170
test stat: z = (4170-3000)/[182.5/sqrt(150)] = 78.52
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Note: That means the sample count is 78.52 standard deviations above the mean.
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Since the critical values for 95% tests is +-1.96, that test stat is
definitely in the critical region.
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Conclusion: Reject Ho. Results support the claim.
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Cheers,
Stan H.
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