Hotel Guest Bills.

The manager of the Danvers-Hilton Resort Hotel stated that

the mean guest bill for a weekend is $600 or less. A member of the hotel’s
accounting staff noticed that the total charges for guest bills have been increasing
in recent months. The accountant will use a sample of future weekend guest bills
to test the manager’s claim.
➢ Which form of the hypotheses should be used to test the manager’s claim?
Explain.
➢ What conclusion is appropriate when cannot be rejected?
➢ What conclusion is appropriate when can be rejected?

Bonus Plan’s Effect on Automobile Sales. The manager of an automobile

dealership is considering a new bonus plan designed to increase sales volume.
Currently, the mean sales volume is 14 automobiles per month. The manager
wants to conduct a research study to see whether the new bonus plan increases
sales volume. To collect data on the plan, a sample of sales personnel will be
allowed to sell under the new bonus plan for a one-month period.
➢ Develop the null and alternative hypotheses most appropriate for this
situation.
➢ Comment on the conclusion when cannot be rejected.
➢ Comment on the conclusion when can be rejected.

Filling Detergent Cartons. A production line operation is designed to fill cartons

with laundry detergent to a mean weight of 32 ounces. A sample of cartons is
periodically selected and weighed to determine whether underfilling or
overfilling is occurring. If the sample data lead to a conclusion of underfilling or
overfilling, the production line will be shut down and adjusted to obtain proper
filling.
➢ Formulate the null and alternative hypotheses that will help in deciding
whether to shut down and adjust the production line.
➢ Comment on the conclusion and the decision when cannot be rejected.
➢ Comment on the conclusion and the decision when can be rejected.
Process Improvement. Because of high production-changeover time and costs,
a director of manufacturing must convince management that a proposed
manufacturing method reduces costs before the new method can be implemented.
The current production method operates with a mean cost of $220 per hour. A
research study will measure the cost of the new method over a sample production
period.
➢ Develop the null and alternative hypotheses most appropriate for this study.
➢ Comment on the conclusion when cannot be rejected.
➢ Comment on the conclusion when can be rejected.

Beer and Cider Consumption. According to the National Beer Wholesalers

Association, U.S. consumers 21 years and older consumed 26.9 gallons of beer
and cider per person during 2017. A distributor in Milwaukee believes that beer
and cider consumption are higher in that city. A sample of consumers 21 years
and older in Milwaukee will be taken, and the sample mean 2017 beer and cider
consumption will be used to test the following null and alternative hypotheses:

➢ Assume the sample data led to rejection of the null hypothesis. What would
be your conclusion about consumption of beer and cider in Milwaukee?
➢ What is the Type I error in this situation? What are the consequences of
making this error?
➢ What is the Type II error in this situation? What are the consequences of
making this error?

Orange Juice Labels. The label on a 3-quart container of orange juice states that
the orange juice contains an average of 1 gram of fat or less. Answer the following
questions for a hypothesis test that could be used to test the claim on the label.
➢ Develop the appropriate null and alternative hypotheses.
➢ What is the Type I error in this situation? What are the consequences of
making this error?
➢ What is the Type II error in this situation? What are the consequences of
making this error?
Carpet Salesperson Salaries. Carpetland salespersons average $8000 per week
in sales. Steve Contois, the firm’s vice president, proposes a compensation plan
with new selling incentives. Steve hopes that the results of a trial selling period
will enable him to conclude that the compensation plan increases the average
sales per salesperson.
➢ Develop the appropriate null and alternative hypotheses.
➢ What is the Type I error in this situation? What are the consequences of
making this error?
➢ What is the Type II error in this situation? What are the consequences of
making this error?

Production Operating Costs. Suppose a new production method will be

implemented if a hypothesis test supports the conclusion that the new method
reduces the mean operating cost per hour.
➢ State the appropriate null and alternative hypotheses if the mean cost for
the current production method is $220 per hour.
➢ What is the Type I error in this situation? What are the consequences of
making this error?
➢ What is the Type II error in this situation? What are the consequences of
making this error?

Federal Tax Returns. According to the IRS, individuals filing federal income
tax returns prior to March 31 received an average refund of $1056 in 2018.
Consider the population of “last-minute” filers who mail their tax return during
the last five days of the income tax period (typically April 10 to April 15).
➢ A researcher suggests that a reason individuals wait until the last five days
is that on average these individuals receive lower refunds than do early
filers. Develop appropriate hypotheses such that rejection of H0 will
support the researcher’s contention.
➢ For a sample of 400 individuals who filed a tax return between April 10
and 15, the sample mean refund was $910. Based on prior experience a
population standard deviation of $1600 may be assumed. What is the p-
value?
➢ At alpha=0.05, what is your conclusion?
 ➢ Repeat the preceding hypothesis test using the critical value approach.

Credit Card Use by Undergraduates. In a study entitled How Undergraduate

Students Use Credit Cards, it was reported that undergraduate students have a
mean credit card balance of $3173. This figure was an all-time high and had
increased 44% over the previous five years. Assume that a current study is being
conducted to determine if it can be concluded that the mean credit card balance
for undergraduate students has continued to increase compared to the original
report. Based on previous studies, use a population standard deviation of $1000.
➢ State the null and alternative hypotheses.
➢ What is the p-value for a sample of 180 undergraduate students with a
sample mean credit card balance of $3325?
➢ Using a .05 level of significance, what is your conclusion?

Use of Texting. TextRequest reports that adults 18–24 years old send and receive
128 texts every day. Suppose we take a sample of 25–34-year-olds to see if their
mean number of daily texts differs from the mean for 18–24-year-olds reported
by TextRequest.
➢ State the null and alternative hypotheses we should use to test whether the
population mean daily number of texts for 25–34-year-olds differs from
the population daily mean number of texts for 18–24-year-olds.
➢ Suppose a sample of thirty 25–34-year-olds showed a sample mean of
118.6 texts per day. Assume a population standard deviation of 33.17 texts
per day and compute the p-value.
➢ With alpha=0.05 as the level of significance, what is your conclusion?
➢ Repeat the preceding hypothesis test using the critical value approach.
CPA Work Hours. The American Institute of Certified Tax Planners reports that
the average U.S. CPA works 60 hours per week during tax season. Do CPAs in
states that have flat state income tax rates work fewer hours per week during tax
season? Conduct a hypothesis test to determine if this is so.
➢ Formulate hypotheses that can be used to determine whether the mean
hours worked per week during tax season by CPAs in states that have flat
state income tax rates is less than the mean hours worked per week by all
U.S. CPAs during tax season?
➢ Based on a sample, the mean number of hours worked per week during tax
season by CPAs in states with flat tax rates was 55. Assume the sample
size was 150 and that, based on past studies, the population standard
deviation can be assumed to be 27.4. Use the sample results to compute the
test statistic and p-value for your hypothesis test.
➢ At alpha=0.01, what is your conclusion?

Length of Calls to the IRS. According to the IRS, taxpayers calling the IRS in
2017 waited 13 minutes on average for an IRS telephone assister to answer. Do
callers who use the IRS help line early in the day have a shorter wait? Suppose a
sample of 50 callers who placed their calls to the IRS in the first 30 minutes that
the line is open during the day have a mean waiting time of 11 minutes before an
IRS telephone assister answers. Based on data from past years, you decide that it
is reasonable to assume that the standard deviation of waiting times is 8 minutes.
Using these sample results, can you conclude that the waiting time for calls placed
during the first 30 minutes the IRS help line is open each day is significantly less
that the overall mean waiting time of 13 minutes? Use alpha=0.05.

Prescription Drug Costs. Annual expenditure for prescription drugs was $838
per person in the Northeast of the country. A sample of 60 individuals in the
Midwest showed a per person annual expenditure for prescription drugs of $745.
Use a population standard deviation of $300 to answer the following questions.
➢ Formulate hypotheses for a test to determine whether the sample data
support the conclusion that the population annual expenditure for
prescription drugs per person is lower in the Midwest than in the Northeast.
➢ What is the value of the test statistic?
➢ What is the p-value?
 ➢ At alpha=0.01, what is your conclusion?

Price of Good Red Wine. According to the Vivino website, the mean price for a
bottle of red wine that scores 4.0 or higher on the Vivino Rating System is $32.48.
A New England–based lifestyle magazine wants to determine if red wines of the
same quality are less expensive in Providence, and it has collected prices for 56
randomly selected red wines of similar quality from wine stores throughout
Providence. The mean and standard deviation for this sample are $30.15 and $12,
respectively.
➢ Develop appropriate hypotheses for a test to determine whether the sample
data support the conclusion that the mean price in Providence for a bottle
of red wine that scores 4.0 or higher on the Vivino Rating System is less
than the population mean of $32.48.
➢ Using the sample from the 56 bottles, what is the p-value?
➢ At alpha=0.05, what is your conclusion?
➢ Repeat the preceding hypothesis test using the critical value approach.

CEO Tenure. A shareholders’ group, in lodging a protest, claimed that the mean
tenure for a chief exective office (CEO) was at least nine years. A survey of
companies reported in The Wall Street Journal found a sample mean tenure
of years for CEOs with a standard deviation of s = 6.38 years.
➢ Formulate hypotheses that can be used to challenge the validity of the claim
made by the shareholders’ group.
➢ Assume 85 companies were included in the sample. What is the p-value
for your hypothesis test?
➢ At alpha=0.01, what is your conclusion?
Chocolate Consumption. The United States ranks ninth in the world in per
capita chocolate consumption; Forbes reports that the average American eats 9.5
pounds of chocolate annually. Suppose you are curious whether chocolate
consumption is higher in Hershey, Pennsylvania, the location of the Hershey
Company’s corporate headquarters. A sample of 36 individuals from the Hershey
area showed a sample mean annual consumption of 10.05 pounds and a standard
deviation of s = 1.5 pounds. Using alpha=0.05, do the sample results support the
conclusion that mean annual consumption of chocolate is higher in Hershey than
it is throughout the United States?

Automobile Insurance Premiums. The Onsure.com website reports that the

mean annual premium for automobile insurance in the United States was $1503
in March 2014. Being from Pennsylvania at that time, you believed automobile
insurance was cheaper there and decided to develop statistical support for your
opinion. A sample of 25 automobile insurance policies from the state of
Pennsylvania showed a mean annual premium of $1440 with a standard deviation
of s = $165.
➢ Develop a hypothesis test that can be used to determine whether the mean
annual premium in Pennsylvania was lower than the national mean annual
premium.
➢ What is a point estimate of the difference between the mean annual
premium in Pennsylvania and the national mean?
➢ At alpha=0.05, test for a significant difference. What is your conclusion?

Union Membership. The U.S. Bureau of Labor Statistics reports that 11.3% of
U.S. workers belonged to unions in 2013. Suppose a sample of 400 U.S. workers
is collected in 2018 to determine whether union efforts to organize have increased
union membership.
➢ Formulate the hypotheses that can be used to determine whether union
membership increased in 2018.
➢ If the sample results show that 52 of the workers belonged to unions, what
is the p-value for your hypothesis test?
➢ At alpha=0.05, what is your conclusion?
Attitudes toward Supermarket Brands. A study by Consumer Reports showed
that 64% of supermarket shoppers believe supermarket brands to be as good as
national name brands. To investigate whether this result applies to its own
product, the manufacturer of a national name-brand ketchup asked a sample of
shoppers whether they believed that supermarket ketchup was as good as the
national brand ketchup.
➢ Formulate the hypotheses that could be used to determine whether the
percentage of supermarket shoppers who believe that the supermarket
ketchup was as good as the national brand ketchup differed from 64%.
➢ If a sample of 100 shoppers showed 52 stating that the supermarket brand
was as good as the national brand, what is the p-value?
➢ At alpha=0.05, what is your conclusion?
➢ Should the national brand ketchup manufacturer be pleased with this
conclusion? Explain.

Holiday Gifts from Employers. Last year, 46% of business owners gave a
holiday gift to their employees. A survey of business owners conducted this year
indicates that 35% plan to provide a holiday gift to their employees. Suppose the
survey results are based on a sample of 60 business owners.
➢ How many business owners in the survey plan to provide a holiday gift to
their employees this year?
➢ Suppose the business owners in the sample did as they plan. Compute
the p-value for a hypothesis test that can be used to determine if the
proportion of business owners providing holiday gifts had decreased from
last year.
➢ Using a .05 level of significance, would you conclude that the proportion
of business owners providing gifts decreased? What is the smallest level of
significance for which you could draw such a conclusion?
Adequate Preparation for Retirement. In 2018, RAND Corporation
researchers found that 71% of all individuals ages 66 to 69 are adequately
prepared financially for retirement. Many financial planners have expressed
concern that a smaller percentage of those in this age group who did not complete
high school are adequately prepared financially for retirement.
➢ Develop appropriate hypotheses such that rejection of will support the
conclusion that the proportion of those who are adequately prepared
financially for retirement is smaller for people in the 66–69 age group who
did not complete high school than it is for the population of the 66–69 year
old.
➢ In a random sample of 300 people from the 66–69 age group who did not
complete high school, 165 were not prepared financially for retirement.
What is the p-value for your hypothesis test?
➢ At alpha=0.01, what is your conclusion?

Returned Merchandise. According to the University of Nevada Center for

Logistics Management, 6% of all merchandise sold in the United States gets
returned. A Houston department store sampled 80 items sold in January and found
that 12 of the items were returned.
➢ Construct a point estimate of the proportion of items returned for the
population of sales transactions at the Houston store.
➢ Construct a 95% confidence interval for the proportion of returns at the
Houston store.
➢ Is the proportion of returns at the Houston store significantly different from
the returns for the nation as a whole? Provide statistical support for your
answer.
Hotel Guest Bills.

a. H0: μ ≤ 600 Manager’s claim

Ha: μ > 600

b.We are not able to conclude that the manager’s claim is wrong.

c.The manager’s claim can be rejected. We can conclude that μ > 600.

Bonus Plan’s Effect on Automobile Sales.

a.H0: μ ≤ 14

Ha: μ > 14 Research hypothesis

b.There is no statistical evidence that the new bonus plan increases sales
volume.

c.The research hypothesis that μ > 14 is supported. We can conclude that the
new bonus plan increases the mean sales volume.
Filling Detergent Cartons.

3. a. H0: μ = 32 Specified filling weight

Ha: μ ≠ 32 Overfilling or underfilling exists

b. There is no evidence that the production line is not operating properly. Allow
the production process to continue.

c. Conclude μ ≠ 32 and that overfilling or underfilling exists. Shut down and

adjust the production line.

Process Improvement.

4.

a. H0: μ ≥ 220
Ha: μ < 220

Research hypothesis to see if mean cost is less than $220.

b. We are unable to conclude that the new method reduces costs.

c. Conclude μ < 220. Consider implementing the new method based on the
conclusion that it lowers the mean cost per hour.

Beer and Cider Consumption.

a. Conclude that the population mean annual consumption of beer and cider in
Milwaukee is greater than 26.9 gallons and hence higher than
throughout the United States.
b. The type I error is rejecting H0 when it is true. This error occurs if the
researcher concludes that the population mean annual consumption of
beer and cider in Milwaukee is greater than 26.9 gallons when the
population mean annual consumption of beer and cider in Milwaukee is
actually less than or equal to 26.9 gallons.
c. The type II error is accepting H0 when it is false. This error occurs if the
researcher concludes that the population mean annual consumption of
beer and cider in Milwaukee is less than or equal to 26.9 gallons when it
is not.

Orange Juice Labels.

6. a. H0: μ ≤ 1 The label claim or assumption
Ha: μ > 1
b. Claiming μ > 1 when it is not. This is the error of rejecting the product’s
claim when the claim is true.
c. Concluding μ ≤ 1 when it is not. In this case, we miss the fact that the
product is not meeting its label specification.

Carpet Salesperson Salaries.

7. a. H0: μ ≤ 8,000
Ha: μ > 8,000 Research hypothesis to see if the plan increases average sales
b. Claiming μ > 8,000 when the plan does not increase sales. A mistake
could be implementing the plan when it does not help.
c. Concluding μ ≤ 8,000 when the plan really would increase sales. This
could lead to not implementing a plan that would increase sales.

Production Operating Costs.

8. a. H0: μ ≥ 220
Ha: μ < 220
b. Claiming μ < 220 when the new method does not lower costs. A mistake
could be implementing the method when it does not help.
c. Concluding μ ≥ 220 when the method really would lower costs. This
could lead to not implementing a method that would lower costs.

Federal Tax Returns.

a. H0: μ  1,056
Ha: μ < 1,056
x − 0 910 − 1056
b. z= = = −1.83
/ n 1600 / 400

Lower tail p-value is the area to the left of the test statistic.
Using normal table with z = –1.83: p-value = .0336.
c. p-value  .05, reject H0. Conclude the mean refund of “last minute”
filers is less than $1,056.
d. Reject H0 if z  –1.645
–1.83  –1.645, reject H0.

Credit Card Use by Undergraduates.

16. a. H0: μ  3,173
Ha: μ > 3,173.
x − 0 3325 − 3173
z= = = 2.04
b.  / n 1000 / 180

p-value = 1.0000 – .9793 = .0207.

c. p-value < .05. Reject H0. The current population mean credit card
balance for undergraduate students has increased compared to the
previous all-time high of $3,173 reported in the original report.

Use of Texting.
17. a. H0: μ = 128
Ha: μ  128
x − 0 118.6 − 128
b. z= = = −1.55
/ n 33.17 / 30

Because z < 0, p-value is two times the lower tail area.

Using normal table with z = –1.55: p-value = 2(.0606) = .1212.
c. p-value > .05, do not reject H0. We cannot conclude that the population
mean daily texts for 25- to 34-year-olds differs significantly from the
population mean of 128 daily texts for 18- to 24-year-olds.
d. Reject H0 if z  –1.96 or z  1.96.
z = –1.55; cannot reject H0. .
The conclusion is the same as in part c.

CPA Work Hours.

18. a. H0: μ ≥ 60
Ha: μ < 60
x − 0 55 − 60
b. z= = = −2.23
/ n 27.4 / 150

Lower tail p-value is the area to the left of the test statistic.
Using normal table with z = – 2.23: p-value = .0129.
 c. p-value = .0129   = .05 .
Reject H0 and conclude that the mean number of hours worked per week
during tax season by CPAs in states with flat state income tax rates is
less than the mean hours CPAs work during tax season throughout the
United States.

Length of Calls to the IRS.

19. H0: μ ≥ 13
Ha: μ < 13
x −
z= 0 = 11 − 13 = −1.77
 n 8 50

p-value is the area in the lower tail.

Using normal table with z = –1.77: p-value = .0384.
p-value  .05, reject H0. Conclude that callers who use the IRS
help line early in the day have a shorter wait.

Prescription Drug Costs.

20. a. H0: μ ≥ 838
Ha: μ < 838
x − 0 745 − 838
z= = = −2.40
b.  / n 300 60

c. Lower tail p-value is area to left of the test statistic.

Using normal table with z = –2.40: p-value = .0082.
d. p-value  .01; reject H . Conclude that the annual expenditure per person
0

on prescription drugs is less in the Midwest than in the Northeast.

Price of Good Red Wine.
a. H0: μ  32.48
Ha: μ < 32.48
x − 0 30.15 − 32.48
b. t= = = −1.45
s/ n 12 / 56
 Degrees of freedom = n – 1 = 55.
p-value is the lower tail area at the test statistic.
Using t table: p-value is between .05 and .10.
Exact p-value corresponding to t = –1.45 is .076.
c. p-value > .05; do not reject H0. We cannot conclude that the price in
Providence for a bottle of red wine that scores 4.0 or higher on the
Vivino Rating System is less than the population mean of $32.48.
d. df = 55 t.05 = –1.673
Reject H0 if t  –1.673
–1.45 > –1.673; do not reject H0.

CEO Tenure.

28. a. H0: μ  9
Ha: μ < 9
x − 0 7.27 − 9
t= = = −2.50
b. s/ n 6.38 / 85

Degrees of freedom = n – 1 = 84
Lower tail p-value is P(t ≤ –2.50).
Using t table: p-value is between .005 and .01.
Exact p-value corresponding to t = –2.50 is .0072.
c. p-value  .01; reject H0. The mean tenure of a CEO is significantly
lower than nine years. The claim of the shareholders group is not valid.

Chocolate Consumption.
H0: μ  9.5
Ha: μ > 9.5
x − 0 10.05 − 9.5
z= = = 2.20
s/ n 1.5 / 36
 Degrees of freedom = n – 1 = 35.
Upper tail p-value is the area to the right of the test statistic.
Using t table: p-value is between .01 and .025.
Exact p-value corresponding to t = 2.20 is .0173.
Because p-value = .0173 < .05, reject H0; mean annual
consumption of chocolate in Hershey is greater than mean annual
consumption of chocolate throughout the United States.

Automobile Insurance Premiums.

a. H0: μ  1,503
Ha: μ < 1,503
b. $1,440 – $1,503 = –$63
x − 0 1440 − 1503
c. t= = = −1.91
s/ n 165 / 25

Degrees of freedom = n – 1 = 24.

p-value is lower-tail area.
Using t table: p-value is between .025 and .05.
Exact p-value corresponding to t = –1.91 is .0341.
d. p-value  .05; reject H0. The population mean automobile premium is
lower in Pennsylvania than the national mean.

Union Membership.
a. H0: p  .113
Ha: p > .113
52
b. p= = .13
400
p − p0 .13 − .113
z= = = 1.07
p0 (1 − p0 ) .113(1 − .113)
n 400

Using normal table with z = 1.07: p-value = 1.0000 – .8577 =

 .1423.
p-value > .05; do not reject H0. We cannot conclude that there has
been an increase in union membership.

Attitudes toward Supermarket Brands.

a. H0: p μ .64
Ha: p  .64
52
b. p= = .52
100
p − p0 .52 − .64
z= = = −2.50
p0 (1 − p0 ) .64(1 − .64)
n 100

Because z < 0, p-value is two times the lower tail area.

Using normal table with z = –2.50: p-value = 2(.0062) = .0124.
c. p-value  .05; reject H0. Proportion differs from the reported .64.
d. The results of the hypothesis test provide evidence that the proportion
differs from .64, and the sample proportion p = .52 suggests that fewer
than 64% of the shoppers believe the supermarket brand is as good as
the name brand. So the manufacturer has some evidence that the
percentage of supermarket shoppers who believe the supermarket
ketchup is as good as the national brand is less than 64%. However, the
manufacturer would have more appropriate evidence if a lower tailed
hypothesis test had been used.

Holiday Gifts from Employers.

a. Sample proportion: p = .35

Number planning to provide holiday gifts: np = 60(.35) = 21

b. H0: p  .46
Ha: p < .46
p − p0 .35 − .46
z= = = −1.71
p0 (1 − p0 ) .46(1 − .46)
n 60
 p-value is area in lower tail.
Using normal table with z = –1.71: p-value = .0436.
c. Using a .05 level of significance, we can conclude that the proportion of
business owners providing gifts has decreased from last year to this
year. The smallest level of significance for which we could draw this
conclusion is .0436; this corresponds to the p-value = .0436. This is why
the p-value is often called the observed level of significance.
Adequate Preparation for Retirement.
41. a. H0: p  .71
Ha: p < .71
165 p − p0 .55 − .71
b. p= = .55, z = = = −6.11
300 p0 (1 − p0 ) .71(1 − .71)
n 300

p-value is the lower-tail area at the test statistic.

Using normal table with z = ˗6.11: p-value ≈ .0000.
c. p-value   = .01 ; reject H0. We conclude that the percentage of 66- to 69-
year-old individuals who are adequately prepared financially for
retirement is smaller for those who did not complete high school.

Returned Merchandise.
42. a. p = 12/80 = .15
p (1 − p ) .15(.85)
b. = = .0399
n 80

p (1 − p )
p  z.025
n

.15 + 1.96 (.0399)

.15 + .0782 or .0718 to .2282