Exhibit 18-6
It is believed that the median yearly income in a suburb of Atlanta is $70,000. A sample of 67 residents was taken. Thirty-eight had yearly incomes above $70,000, 26 had yearly incomes below $70,000, and 3 had yearly incomes equal to $70,000. The null hypothesis to be tested is H 0 : median = $70,000.
-Refer to Exhibit 18-6. The null hypothesis should be
A)rejected
B)not rejected
C)revised
D)None of these alternatives is correct.

Question

Quizplus · Accepted Answer

The null hypothesis states that the median income is $70,000. Since 38 residents have income above $70,000, and only 26 below, it suggests that the median income is actually higher than $70,000. However, this difference may be due to chance. Therefore, we need to conduct a hypothesis test to see if there is sufficient evidence to reject the null hypothesis. Based on the given data, we cannot reject the null hypothesis at any reasonable level of significance. Thus, the null hypothesis should not be rejected.

Exhibit 18-6 It Is Believed That the Median Yearly Income in a in a Suburb