Question

A Bureau of Labor Statistics (BLS) economist conducts a statistical study to test his hunch that in households with a minimum-wage worker, mean household debt increases (spending increases more than income) following a hike in the minimum wage.

Formulate the null and alternative hypotheses for the test conducted by the economist, For each statement below indicate whether the statement is the null hypothesis, the alternative hypothesis, or neither,

a. In households with a minimum-wage worker, mean household debt decreases following a hike in the minimum wage.
b. In households with a minimum-wage worker, mean household debt decreases or stays the same following a hike in the minimum wage.
c. In households with a minimum-wage worker, mean household debt is unaffected by a hike in the minimum wage.
d. In households with a minimum-wage worker, mean household debt increases following a hike in the minimum wage.

Answer 1

a. Neither

b. Null hypothesis

c. Neither

d. Alternative hypothesis

Explanation:

This hypothesis test wants to test the claim that, in households with a minimum-wage worker, mean household debt increases following a hike in the minimum wage.

Then, the alternative hypothesis, that reflects the claim, will state that the mean household debt significantly increases (under the previous descriptions).

The null hypothesis will state the opposite: that mean household debt does not signficantly increases in that conditions (it stays the same or decreases).

a. In households with a minimum-wage worker, mean household debt decreases following a hike in the minimum wage. NEITHER.

b. In households with a minimum-wage worker, mean household debt decreases or stays the same following a hike in the minimum wage. NULL HYPOTHESIS.

c. In households with a minimum-wage worker, mean household debt is unaffected by a hike in the minimum wage. NEITHER.

d. In households with a minimum-wage worker, mean household debt increases following a hike in the minimum wage. ALTERNATIVE HYPOTHESIS.