Question

Two random samples are taken from private and public universities

(out-of-state tuition) around the nation. The yearly tuition is recorded from each sample and the results can be found below. Test to see if the mean out-of-state tuition for private institutions is statistically significantly higher than public institutions. Assume unequal variances. Use a 1% level of significance.
Private Institutions (Group 1 )
43,120
28,190
34,490
20,893
42,984
34,750
44,897
32,198
18,432
33,981
29,498
31,980
22,764
54,190
37,756
30,129
33,980
47,909
32,200
38,120
Public Institutions (Group 2)
25,469
19,450
18,347
28,560
32,592
21,871
24,120
27,450
29,100
21,870
22,650
29,143
25,379
23,450
23,871
28,745
30,120
21,190
21,540
26,346
Hypotheses:
H0: μ1 (?) μ2
H1: μ1 (?) μ2
What are the correct hypotheses for this problem?
-A. H0: μ1 = μ2 ; H1: μ1 ≠ μ2
-B. H0: μ1 = μ2 ; H1: μ1 > μ2
-C. H0: μ1 ≤ μ2 ; H1: μ1 ≥ μ2
-D. H0: μ1 < μ2 ; H1: μ1 = μ2
-E. H0: μ1 ≠ μ2 ; H1: μ1 = μ2
-F. H0: μ1 ≥ μ2 ; H1: μ1 ≤ μ2

Answer 1

Explanation:

For private Institutions,

n = 20

Mean, x1 = (43120 + 28190 + 34490 + 20893 + 42984 + 34750 + 44897 + 32198 + 18432 + 33981 + 29498 + 31980 + 22764 + 54190 + 37756 + 30129 + 33980 + 47909 + 32200 + 38120)/20 = 34623.05

Standard deviation = √(summation(x - mean)²/n

Summation(x - mean)² = (43120 - 34623.05)^2+ (28190 - 34623.05)^2 + (34490 - 34623.05)^2 + (20893 - 34623.05)^2 + (42984 - 34623.05)^2 + (34750 - 34623.05)^2 + (44897 - 34623.05)^2 + (32198 - 34623.05)^2 + (18432 - 34623.05)^2 + (33981 - 34623.05)^2 + (29498 - 34623.05)^2 + (31980 - 34623.05)^2 + (22764 - 34623.05)^2 + (54190 - 34623.05)^2 + (37756 - 34623.05)^2 + (30129 - 34623.05)^2 + (33980 - 34623.05)^2 + (47909 - 34623.05)^2 + (32200 - 34623.05)^2 + (38120 - 34623.05)^2 = 1527829234.95

Standard deviation = √(1527829234.95/20

s1 = 8740.22

For public Institutions,

n = 20

Mean, x2 = (25469 + 19450 + 18347 + 28560 + 32592 + 21871 + 24120 + 27450 + 29100 + 21870 + 22650 + 29143 + 25379 + 23450 + 23871 + 28745 + 30120 + 21190 + 21540 + 26346)/20 = 25063.15

Summation(x - mean)² = (25469 - 25063.15)^2+ (19450 - 25063.15)^2 + (18347 - 25063.15)^2 + (28560 - 25063.15)^2 + (32592 - 25063.15)^2 + (21871 - 25063.15)^2 + (24120 - 25063.15)^2 + (27450 - 25063.15)^2 + (29100 - 25063.15)^2 + (21870 - 25063.15)^2 + (22650 - 25063.15)^2 + (29143 - 25063.15)^2 + (25379 - 25063.15)^2 + (23450 - 25063.15)^2 + (23871 - 25063.15)^2 + (28745 - 25063.15)^2 + (30120 - 25063.15)^2 + (21190 - 25063.15)^2 + (21540 - 25063.15)^2 + (26346 - 25063.15)^2 = 1527829234.95

Standard deviation = √(283738188.55/20

s2 = 3766.55

This is a test of 2 independent groups. Let μ1 be the mean out-of-state tuition for private institutions and μ2 be the mean out-of-state tuition for public institutions.

The random variable is μ1 - μ2 = difference in the mean out-of-state tuition for private institutions and the mean out-of-state tuition for public institutions.

We would set up the hypothesis. The correct option is

-B. H0: μ1 = μ2 ; H1: μ1 > μ2

Since sample standard deviation is known, we would determine the test statistic by using the t test. The formula is

(x1 - x2)/√(s1²/n1 + s2²/n2)

t = (34623.05 - 25063.15)/√(8740.22²/20 + 3766.55²/20)

t = 9559.9/2128.12528473889

t = 4.49

The formula for determining the degree of freedom is

df = [s1²/n1 + s2²/n2]²/(1/n1 - 1)(s1²/n1)² + (1/n2 - 1)(s2²/n2)²

df = [8740.22²/20 + 3766.55²/20]²/[(1/20 - 1)(8740.22²/20)² + (1/20 - 1)(3766.55²/20)²] = 20511091253953.727/794331719568.7114

df = 26

We would determine the probability value from the t test calculator. It becomes

p value = 0.000065

Since alpha, 0.01 > than the p value, 0.000065, then we would reject the null hypothesis. Therefore, at 1% significance level, the mean out-of-state tuition for private institutions is statistically significantly higher than public institutions.