Question

The average cost of tuition and room and board at a small private liberal arts college is reported to be $8,500 per term, but a financial administrator believes that the average cost is higher. A study conducted using 350 small liberal arts colleges showed that the average cost per term is $8,745. The population standard deviation is $1,200. Let α = 0.05. What are the null and alternative hypotheses for this study?

Answer 1

Answer & Explanation:

The null hypothesis (H0) is what the study is trying to reject, is what the study wants to disprove. In this case, the financial administrator believes that the average cost of tuition and room is greater than $8,500. Then, he wants to statistically disprove that the average cost per term is equal to $8,500.

H0: average cost = $8,500

H0:μ=$8,500

The alternative hypothesis (H1) is the opposite, is what the financial administrator wants to prove: the average cost per term is greater than $8,500.

H1: average cost > $8,500

H1:μ>$8,500