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Test of Hypothesis for the Average Gasoline Price

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The average gasoline price of one of the major oil companies has been $2,25 per gallon. Recently, the company has undertaken several efficiency measures in order to reduce prices. Management is interested in determing whether their efficiency measures have actually reduced prices. That is, the alternative hypothesis is that the current average price is less than $2.25. A random sample of 49 of their gas stations is selected and the average price is determined to be $2.20. Assume that the standard deviation of the population is $0.14.

At 95% confidence, test to determine whether the measure were effective in reducing the average price.

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Solution Summary

This solution tests the hypothesis that the efficiency measures were effective in reducing the average price with calculations and interpretation of the results provided in an attached Excel file.

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The average gasoline price of one of the major oil companies has been $2,25 per gallon. Recently, the company has undertaken several efficiency measures in order to reduce prices. Management is interested in determing whether their efficiency measures have actually reduced prices. That is, the alternative hypothesis is that the current average price is less than $2.25. A random sample of 49 of their gas stations is selected and the average price is determined to be $2.20. Assume ...

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