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Hypothesis testing : Five step method T test

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Chrysler Corp. is responding to an advertisement by Toyota, which claims that its compact version gets much better gasoline mileage for in-city driving than any U.S. made car. Below are the results of surveys conducted to test the claim. Perform the appropriate test at the 0.01 significance level. Do you reject or fail to reject the claim?

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Solution Summary

The solution provides step by step method for the calculation of Hypothesis testing. 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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Description of Hypothesis Testing: Five step method T test

A vinyl siding company claims that the mean time to install siding on a medium-size house is at most 20 hours with a standard deviation of 3.7 hours. A random sample of 40 houses sided in the last three years has a mean installation time of 20.8 hours. At the 0.05 significance level, can a claim be made that it takes longer on average than 20 hours to side a house?

a. State the null and alternate hypotheses.


b. State the decision rule

c. Compute the value of the test statistic.

d. Formulate the decision rule.

e. What is your decision regarding the null hypothesis? Interpret the result.

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