According to the U.S. federal Highway Administration, the mean number of miles driven annually is µ=12,200. An insurance agent in Montana believes that the mean number of miles driven by the residents of his state is higher than the national average. A random sample of 35 drivers is taken from the list of registered drivers in the state of Montana. The mean number of miles driven by the 35 drivers is 12,895. Assuming the population standard deviation, σ = 3800 miles, test the agent's claim at the 1% level of significance.
1. State the Null Hypothesis and the Alternative Hypothesis
2. Determine the test statistic.
3. Determine the P-value
4. Make a decision regarding the hypotheses based on the P-value and the Level of Significance.
The solution answers the question(s) below.