. It has been reported that the average credit card debt for college seniors is

Question

. It has been reported that the average credit card debt for college seniors is $3262. The student senate at a large university feels that their seniors have a debt much less than this, so it conducts a study of 50 randomly selected seniors and finds that the average debt is $2995, and the population standard deviation is $1100. Let’s conduct the test based on a Type I error of =0.05.

a. (3 points) Identify the null hypothesis and alternative hypothesis.

b. (3 points) Determine the test statistic.

c. (3 points) Is there sufficient evidence to support the researcher’s claim? Explain.

Explanation / Answer

Solution:-
a) H : µ 3262
H1 : µ < 3262 (claim)

b) Z = (2995 - 3262)/(1100/sqrt(50)) = -1.72

c) There is sufficient evidence to support their claim.

Since the z-value lies in the critical region .we are able to reject the null hypothesis.

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