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Hypothesis Testing of Population Mean: Z Test

According to news reports, Las Vegas betting parlors increased the number of proposition (prop) bets available to gamblers for this year's Super Bowl (Example: Which team will be the first to suspend a starting player for a team rules violation?). It is believed that the mean number of prop bets per typical gambler is normally distributed with a mean of 7 and a standard deviation of 5. A survey of the first 36 gamblers to place bets on Super Bowl Sunday at the Mirage indicated that the sample mean number of such prop bets was 9. At the 0.05 level of significance, is the population mean number of prop bets per gambler more than 7. Complete the following as part of the solution process:

a. State the null hypothesis and the alternative hypothesis.

b. Is this a one tail or a two tail test. (Explain)

c. Follow the 5 Step Procedure for testing a Hypothesis:
1. State the Null Hypothesis (H0) and the Alternative Hypothesis (H1).
2. Select a level of significance.
3. Select the Test Statistic.
4. Formulate the Decision Rule.
5. Make a Decision.
Show all results for each of the steps.

d. What would be the final decision and why.

Solution Summary

The solution provides step by step method for the calculation of testing of hypothesis. Formula for the calculation and Interpretations of the results are also included. Interactive excel sheet is included. The user can edit the inputs and obtain the complete results for a new set of data.

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