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4 December, 09:48

The cost of a daily newspaper varies from city to city. however, the variation among prices remains steady with a standard deviation of 20?. a study was done to test the claim that the mean cost of a daily newspaper is $1.00. ten costs yield a mean cost of 96? with a standard deviation of 18?. do the data support the claim at the 1% level?

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  1. 4 December, 11:21
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    First, we establish our hypothesis:

    Null hypothesis H0: μ = $1.00

    Alternative hypothesis Ha: μ ≠ $1.00

    Let’s say X = the sample average cost of a daily newspaper = 0.96

    u = population mean cost = 1.00

    S = sample standard deviation = 0.18

    Calculating for z value:

    z = (X - u) / S

    z = (0.96 - 1) / 0.18

    z = - 0.222

    From the standard distribution table at this z value, p-value = 0.4129

    Since alpha = 0.01, the decision therefore is:

    Do not reject the null hypothesis because the p-value is greater than 0.01. There is enough evidence to support the claim that the mean cost of newspapers is $1.
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