Question

he u.s. energy information administration claimed that u.s. residential customers used an average of 10,947 kilowatt hours (kwh) of electricity this year. a local power company believes that residents in their area use more electricity on average than eia's reported average. to test their claim, the company chooses a random sample of 146 of their customers and calculates that these customers used an average of 11,140kwh of electricity last year. assuming that the population standard deviation is 1242kwh , is there sufficient evidence to support the power company's claim at the 0.02 level of significance?

Answer 1

To test the power company's claim, we will use a one-sample t-test to compare the average electricity usage in the local area to the reported average. We will set the level of significance at 0.02.

Step-by-step explanation:

To test the claim that residents in a local area use more electricity on average than the reported average, we can use a hypothesis test. We will use a one-sample t-test since we have a sample mean, population mean, sample size, and population standard deviation.

The null hypothesis, denoted as H0, is that the average electricity usage in the local area is the same as the reported average, meaning mu = 10,947 kWh. The alternative hypothesis, denoted as Ha, is that the average electricity usage in the local area is greater than the reported average, meaning mu > 10,947 kWh.

We will set the level of significance at 0.02. Using the formulas for calculating the test statistic and the critical value, we can then compare the test statistic to the critical value to determine if there is sufficient evidence to support the power company's claim.