Question

The charitable foundation for a large metropolitan hospital is conducting a study to characterize its donor base. In the past, most donations have come from relatively wealthy individuals; the average annual donor income in the most recent survey was right at $100,000. The foundation believes the average has now increased. A random sample of 200 current donors showed a mean annual income of $103,157 and a standard deviation of $27,498.a. To perform this study, we should form a null hypothesis stating that the average is ______________ 100,000. (Please fill in only one of the following: "less than", "less than or equal to", "equal to", "greater than", "greater than or equal to". Please do not use symbols.)b. At the 10% significant level, the p-value/statistics is _____________________ (Please keep three decimal points) so we should __________________ the null hypothesis (Please only fill in "reject" or "not reject".).c. Hence, we may conclude that the average _________________ increased (Please only fill in "has" or "has not") and the probability that our conclusion is correct is at least _________________ percent.

Answer 1

Explanation:

a) We would set up the hypothesis test. This is a test of a single population mean since we are dealing with mean

For the null hypothesis,

H0: µ equal to 100000

For the alternative hypothesis,

H1: µ greater than 100000

This is a right tailed test

Since the population standard deviation is nit given, the distribution is a student's t.

Since n = 200

Degrees of freedom, df = n - 1 = 200 - 1 = 199

t = (x - µ)/(s/√n)

Where

x = sample mean = 103157

µ = population mean = 100000

s = samples standard deviation = 27498

t = (103157 - 100000)/(27498/√200) = 1.62

We would determine the p value using the t test calculator.

p = 0.053

Alpha = 10% = 0.1

Since alpha, 0.1 > than the p value, 0.053, then

b) At the 10% significant level, the p-value/statistics is 0.053, so we should not reject the null hypothesis.

c) Hence, we may conclude that the average has not increased and the probability that our conclusion is correct is at least 90 percent.