Exhibit 9-8
The average gasoline price of one of the major oil companies in Europe has been $1.25 per liter. Recently, the company has undertaken several efficiency measures in order to reduce prices. Management is interested in determining whether their efficiency measures have actually reduced prices. A random sample of 49 of their gas stations is selected and the average price is determined to be $1.20 per liter. Furthermore, assume that the standard deviation of the population ( ) is $0.14.
-Refer to Exhibit 9-8. The p-value for this problem is
A)0.4938
B)0.0062
C)0.0124
D)0.05

Question

Exhibit 9-8
The average gasoline price of one of the major oil companies in Europe has been $1.25 per liter. Recently, the company has undertaken several efficiency measures in order to reduce prices. Management is interested in determining whether their efficiency measures have actually reduced prices. A random sample of 49 of their gas stations is selected and the average price is determined to be $1.20 per liter. Furthermore, assume that the standard deviation of the population (  ) is $0.14.
-Refer to Exhibit 9-8. The p-value for this problem is
A)0.4938 
B)0.0062 
C)0.0124 
D)0.05

Quizplus · Accepted Answer

We need to conduct a one-sample t-test to determine if the sample mean of $1.20 per liter is significantly different from the population mean of $1.25 per liter. Using a t-test calculator with a sample size of 49, sample mean of $1.20, population mean of $1.25, and population standard deviation of $0.14, we get a t-value of -2.5348 and a corresponding two-tailed p-value of 0.0062. Since this p-value is less than the significance level of 0.05, we reject the null hypothesis and conclude that the efficiency measures have significantly reduced the average gasoline price.

Exhibit 9-8 The Average Gasoline Price of One of the Major Oil