It is estimated that the average adult spends $123 in entertainment costs per month. Some believe this figure is too high and conducted a survey of 40 randomly selected adults. They found a mean of $113.03 per month was spent and a standard deviation of $25.99.
-The appropriate test statistic to test the hypotheses is _____.
A)-0.38
B)2.43
C)0.38
D)-15.34
E)-2.43

Question

Quizplus · Accepted Answer

The appropriate test statistic to test the hypotheses is the t-statistic, which is calculated as (sample mean - population mean) / (sample standard deviation / sqrt(sample size)). Substituting the given values, we get t = (3.70 - 3.40) / (0.80 / sqrt(25)) = 2.43. Since the alternative hypothesis is right-tailed and we are considering a 5% level of significance, the critical t-value (using a t-distribution with 24 degrees of freedom) is 1.711. Since the calculated t-value is greater than the critical t-value, we reject the null hypothesis and conclude that there is significant evidence to suggest that the population mean is greater than 3.40. Hence the answer is (E).

It Is Estimated That the Average Adult Spends $123 in Entertainment