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# 2 Problems

2) Disney tells you that the average distance between the ears on a Mickey Mouse hat is 5 inches. In a sample of 100 Mickey Mouse hats you find that the average distance between the ears on the hats is 5.2 inches with a standard deviation of 1 inch. Conduct a hypothesis test to determine if the average distance between the ears on a Mickey Mouse hat is greater than 5 inches ( ). Assume that &#945; = .01 and remember to clearly state the null and alternate hypothesis as well as your conclusion about the average distance between the ears of a Mickey Mouse hat.

4) Electricity is commonly traded at the California-Oregon border (COB) and Palo Verde (PV) in Arizona. Assume you take a sample of 100 daily electricity market closing prices (in \$/megawatthour) from both COB and PV. The following are the summary statistics resulting from your sample:

COB PV
Average Price \$200 \$300
Standard Dev. \$100 \$50
Sample Size 100 100

A) Using the information above conduct a hypothesis test to determine if the average market price at COB is the same as the average market price at PV (Hint: You are looking at the difference in two means). Assume &#945; = .05 and remember to clearly state your null and alternate hypothesis as well as your conclusion about whether or not the average prices are equal.

\$2.19