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Hypothesis Testing of Means

The Non-Profit Times conducted a random sample of 126 U.S. non-profit companies at the beginning of 2005. The results reported that the average salary of an executive director of a nonprofit was $92,411 per year with a sample standard deviation of $25,326. A research team from a competing newspaper, which was skeptical of these results, conducted a survey of its own with the same size sample of companies and obtained a mean salary of $87,566 for executive directors (with approx. the same standard deviation as the non-profit times sample).

1)Set up the appropriate null and alternative hypothesis for testing whether the original sample overestimated the average executive director annual salary.

2)Now test the competing newspaper's view that the original sample overestimated the average executive director annual salary. Use an estimation (total) error of 5 percent.

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Solution:

1.)Set up the appropriate null and alternative hypothesis for testing whether the original sample overestimated the average executive director annual salary.
Ho: There is not difference in salary
H1: original newspaper overestimated average executive's ...

Solution Summary

Solution describes Null and Alternate hypothesis for testing whether the original sample overestimated the average executive director annual salary. It also tests the competing newspaper's view that the original sample overestimated the average executive director annual salary

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