Question

The average student loan debt is reported to be $25,235. A student belives that the student loan debt is higher in her area. She takes a random sample of 100 college students in her area and determines the mean to be $27,524 and the standard devition to be $6000. Is there sufficient evidence to support the student' claim at a 5% significance level?

Answer 1

We reject the students claim because the P-value is less than the significance level.

Explanation:

First of all let's define the hypothesis;

Null hypothesis;H0; μ = 25,235

Alternative hypothesis;Ha; μ > 25,235

Now, let's find the test statistic. Formula is;

t = (x' - μ)/(σ/√n)

We are given;

x' = 27,524

μ = 25,235

σ = 6000

n = 100

Thus;

t = (27524 - 25235)/(6000/√100)

t = 2289/600

t = 3.815

So from online p-value calculator as attached, using t=3.815, DF = 100-1 = 99 and significance level of 0.05, the P-value is gotten as p = 0.000237.

The p-value is less than the significance level of 0.05. Thus,we reject the students claim.