Question

A newspaper ran a story concerning the increasing prices of mobile phones. The story stated that mobile phone prices dropped a few years ago, but now are beginning to increase in price because of added features.

• According to the story, the average price of all mobile phones a few years ago was £215.
• A large random sample of mobile phones (n = 200) was taken, and their prices recorded.
• We wish to use a hypothesis test to determine if the average price of all mobile phones is now greater than £215.
Required: Define the hypotheses, and with reference to the applicable random variable distribution, find the rejection region appropriate for this test if we are using the significance level α = 0.05.

Answer 1

H0 : μ = 215

H1 : μ > 215

Rejection region :

Zstatistic > Z0.05

Explanation:

Given that:

Average price of all mobile phones was £215

Sample size = 200

Significance level (α) = 0.05

To determine if the average price of all mobile phones is now greater than £215

The Null hypothesis (H0) :

H0 : μ = 215

Alternative hypothesis (H1) :

H1 : μ > 215

The rejection region :

|Zstatistic > Zα|

α = 0.05 ; Z0.05

Rejection region :

Zstatistic > Z0.05