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Hypothesis testing to determine earnings in tips

At the time she was hired as a server, Beth was told, "you can average more than $20 a day in tips." Over the first 35 days she was employed at the restaurant, the mean daily amount of her tips was $24.85, with a standard deviation of $3.24. At the .01 significance level, can Beth conclude that she is earning an average of more than $20 in tips? State the null hypothesis and alternate hypothesis, state decision rule, and compute the value of the test statistics? What is the P-value?

(a) State the null hypothesis and the alternate hypothesis.
(b) State the decision rule.
(c) Compute the value of the test statistic.
(d) What is your decision regarding H0?
(e) What is the p-value?

Solution Summary

Using hypothesis tests we determine the average earnings of a server, Beth, in tips.

$2.19