Question

The average cost of tuition, room and board at small private liberal arts colleges 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 with a standard deviation of $1,200. Let = 0.05. What are the null and alternative hypotheses for this study?

Answer 1

H0 : u = 8500

H1 : u > 8500

Explanation:

Given:

sample size, n = 350

mean, u = 8500

Sample mean, x' = 8745

Standard deviation = 1,200

Level of significance = 0.05

In this case, the financial administrator believes that the average cost of tution, room and board at small liberal arts colleges is higher than the reported $8500. We can say this is the alternative hypoyhesis, since it is a claim.

The null hypothesis would be the opposite of the alternative hypothesis.

Therefore, the null and alternative hypotheses are:

H0 : u = 8500

H1 : u > 8500