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    Hypothesis testing based on t test

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    An engineering firm is evaluating their back charges. They originally believed their average back charge was $1800. They are concerned that the true average is higher, which could hurt their quarterly earnings. They randomly select 40 customers, and calculate the corresponding sample mean back charge to be $1950. If the standard deviation of back charges is $500, and alpha = 0.05, should the engineering firm be concerned?

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    Solution Summary

    A step by step method for computing the test statistic based on t test statistic for comparing population mean is provided in a step by step, clear format.