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Hypothesis Testing & Confidence Interval: Population Mean

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Average cost of $3,200 for products. n=25. After review it seems mean cost is $2,000 with a standard deviation of $150.
Test that average cost is $3,200 or more versus $2,000. assume level of significance of .05.

What is the null hypothesis and the alternative hypothesis? What is the critical value and the p-value? What is the test statistic? Construct 95% confidence interval for the mean cost.

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Solution Summary

The solution provides step by step method for the calculation of testing of hypothesis and confidence interval for mean. Formula for the calculation and Interpretations of the results are also included. Interactive excel sheet is included. The user can edit the inputs and obtain the complete results for a new set of data.

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One tailed test
Average cost of $3,200 for products. n=25. After review it seems mean cost is $2,000 with a standard deviation of $150. Test that average cost is $3,200 or more versus $2,000. Assume level of significance of .05.
Answers
What is the null hypothesis and the alternative hypothesis?
The null hypothesis tested is
H0: Average cost ≥ $3,200 (µ ≥ 3,200)
The alternative ...

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