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    Hypothesis testing

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    The cost of a one-carat VS2 clarity, H color diamond from Diamond Source USA is $5600. A Midwestern jeweler makes calls to contacts in the diamond district of New York City to see whether the mean price of diamonds there differs from $5600.

    a. Formulate hypotheses that can be used to determine whether the mean price in New York City differs from $5600.

    b. A sample of 25 New York City contacts provided the prices shown in the attached file named diamonds. What is the p-value?

    c. at a = .05, can the null hypothesis be rejected? What is your conclusion?

    d. Repeat the preceding hypothesis test using the critical value approach.

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    Solution Summary

    This problem looks at several steps in making and testing hypotheses.