Question

Bank of America's Consumer Spending Survey collected data on annual credit card charges in seven different categories of expenditures: transportation, groceries, dining out, household expenses, home furnishings, apparel, and entertainment. Using data from a sample of 42 credit card accounts, assume that each account was used to identify the annual credit card charges for groceries (population 1) and the annual credit card charges for dining out (population 2). Formulate the null and alternative hypotheses to test for no difference between the population mean credit card charges for groceries and the population mean credit card charges for dining out.

Answer 1

The null hypothesis (H0) for testing the difference between the population means of annual credit card charges for groceries and dining out is μ1 - μ2 = 0. The alternative hypothesis (H1) is μ1 - μ2 ≠ 0, indicating a possible difference between the two means.

Step-by-step explanation:

To test for no difference between the population mean credit card charges for groceries (population 1) and the population mean credit card charges for dining out (population 2), we set up our null and alternative hypotheses. The null hypothesis (H0) represents no difference between the two means, while the alternative hypothesis (H1) suggests there is a difference.

The hypotheses can be formulated as follows:

μ1 represents the mean annual credit card charges for groceries, and μ2 represents the mean annual credit card charges for dining out.