Question

An entrepreneur is considering the purchase of a coin-operated laundry. The current owner claims that over the past 5 years, the average daily revenue was $675 with a standard deviation of $75. A sample of 30 days reveals daily revenue of $625. If you were to test the null hypothesis that the daily average revenue was $675, which test would you use?

Answer 1

Answer: z-test for population mean.

Explanation:

Given : purchase of a coin-operated laundry. The current owner claims that over the past 5 years, the average daily revenue was $675 with a standard deviation of $75.

So the null hypothesis and alternative hypothesis will be :-

`H_0:\mu=\$675\\\\ H_a:\mu\\eq\$625`

It means the test will be for population mean.

We assume that this is normally distributed.

We know that we use t-test for sample size less than 30 and z-test for sample size greater than 30 .

Since the sample size is 30, so the test use here is z-test for population mean.