Share
Explore BrainMass

CJ's Discount Appliance problem

CJ's Discount Appliance Store issues its own credit cards. The credit manager wants to know if the mean monthly, unpaid balance is more than $400. The level of significance is .05. A random check of 200 unpaid balances revealed the sample mean of $420 and the standard deviation of the sample is $40. Should the credit manager conclude the population mean is greater than $400, or is it reasonable that the difference of $20 is due to chance?

1. What test is most appropriate for this problem?
A. Chi-square
B. ANOVA-single factor
C. T-test of paired samples
D. T-test assuming unequal variances
E. Z-test two-sample for means

2. What is the null hypothesis?
A. H0: μ = 400
B. H0: μ ≠ 400
C. H0: μ ≥ 400
D. H0: μ ≤ 400
E. H0: μ1 = μ2

3. What is the test value?
A. -7.07
B. 7.07
C. 1.65
D. -1.65
E. Something else

4. What is your decision?
A. Accept the null of no difference and conclude the balance is not statistically greater than $400.
B. Accept the null of no difference and conclude the balance is statistically less than $400.
C. Reject the null of no difference and conclude the balance is not statistically less than $400.
D. Reject the null of no difference and conclude the balance is statistically greater than $400.
E. Something else

Solution Summary

Step by step solutions to all the problems is provided. The expert tests the most appropriate for the problem.

$2.19