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Hypothesis Testing of Mileage

The Environmental Protection Agency (EPA) estimated that the, on average, 1994 Polaris automobile obtains a 35 miles per gallon (mpg) on the highway. However, the company that manufactures the car claims that the EPA has underestimated the Polaris' mileage. To support its assertion, the company randomly selects 50 1994-Polaris cars and records the mileage obtained (below) for each car over a driving course similar to the one used by the EPA.
Mileage of 50 automobile
35 34 36 34 38 36 37 37 34 37
35 38 39 38 34 34 39 39 36 34
34 39 36 39 36 36 34 37 35 39
37 37 39 35 34 37 39 35 39 37
39 39 38 38 37 39 38 34 34 38

a) Identify the NULL, Ho and ALTERNATIVE, Ha hypotheses if the company wishes to prove its claim.
b) Test the hypotheses using Level of Significance a = 0.02.
c) Determine and explain the p-value for the test. Based on the p-value obtained, would you reach the same conclusion for the test as in part b) if level of significance is changed to a = 0.01?

Solution Summary

This solution provides the null and alternative hypothesis and finds the z-statistic to compare against the p-value to make a decision to either accept or reject the null hypothesis. All workings and formulas are shown.

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