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    Hypothesis testing

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    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

    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 α = .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.

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