A restaurant that bills its house account monthly is concerned that the average monthly bill exceeds $200 per account. A random sample of twelve accounts is selected, resulting in a sample mean of $220 and a standard deviation of $12. The t-test is to be conducted at the 5% level of significance. The t-value is calculated to be 5.77. At the 0.01 level of significance, what is your decision?
A) You reject the null hypothesis, and agree that the average monthly bill exceeds $200.
B) You have insufficient evidence to reject the null hypothesis.
C) You reject the alternate hypothesis and agree that the average monthly bill is less than $200.
D) You should have used the z-test.

Question

Quizplus · Accepted Answer

The t-value of 5.77 is greater than the critical t-value at the 5% level of significance with 11 degrees of freedom (from a t-table). Therefore, we reject the null hypothesis and agree that the average monthly bill exceeds $200.

A Restaurant That Bills Its House Account Monthly Is Concerned