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Hypothesis Testing for difference between means

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Because of massive cutbacks in transfer payments to the provinces, provincial governments are in a quandary over how to maintain a high standard in health care. Given the sensitive nature of the issue, the provinces have set up independant commissions to study the issue. A task force in Alberta has suggested that more "community health clinics", run primarily by community health nurses, be set up, as opposed to "medi clinics", run primarily by doctors. The task force claims that the average cost per visit will be significantly less if the suggestion is adopted. To substantiate the claim, the task force provides the following data from a recent study:

Medi-Clinics CH Clinics

Sample Size 35 visits 40 visits

$25.00 $18.00
Standard Deviation $8.00 $6.00

At a 0.05 level of significance, test the claim of the task force

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Solution Summary

The solution tests a hypothesis for difference between means. A hypothesis-testing procedure is used for testing the difference in the average cost of "community health clinics", run primarily by community health nurses, and "medi clinics" run primarily by doctors.

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Null Hypothesis: H0: M 1= M 2 (There is no difference between the means)
Alternative Hypothesis: H1: M 1 > M 2 (Medi clinics have higher average cost)

Compute a 95% confidence interval for the difference in mean scores
( 0.05 level of significance= 1-0.05=0.95=95% confidence interval)

Hypothesized ...

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