Business Statistics

332 Business Statistics

Solution The seven steps of hypothesis testing can be performed as below:

Step 1: Set null and alternative hypotheses

H

0

:  = 2.0

H

1

:   2.0

Step 2: Determine the appropriate statistical test

Sample size is ( 30). Hence, z formula (when population standard deviation is

not known) for a single population mean is given as

x

z

s

n

−

=



Step 3: Set the level of signicance

The level of signicance  is set as 0.01

Step 4: Set the decision rule

For 99% condence level ( = 0.01), the critical value of z is given as

2

2.575z = ±



2

2.575z = ±



. If the computed value of z is between +2.575 and –2.575, accept the

null ...