Act 2 Week 4

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Activity Week 4 
2. A company’s management thinks that monthly sells have increased, and now average over 
£50 per month. 
• The distribution is known to be normal. 
• We assume σ = 10 is known. 
• N = 49 
• sample mean = 53.1 
Test the claim at the 10% significance (α=.10). 
Form hypothesis test: 
H0: µ ≤ 50 or =50 the average is not over $50 per month 
 H1: µ > 50 the average is greater than $50 per month 
Z=
x̅−µ 
𝜎
√𝑛
=
53.1−50
10
√49
= 2.17 
Z > Critical Value 
2.17 > Critical Value 
Reject H0 if z > 1.28 
i.e: There is sufficient evidence that the mean bill is over $50 
Then, we do reject the null that the mean is less than 50.