The average cost of tuition, room and board at a small private liberal arts college is reported to be $8,500 per term, but a financial administrator at Moravian
College believes that the average cost is much higher. A study was conducted using 150 small liberal arts colleges and findings showed that the average cost per term is $9,000 with a standard deviation of $1,200. Let alpha = 0.05. The Ho: Mu less than or equal to $8,500. H1: Mu is bigger than $8,500.
What is the critical z-value for this test?
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A. B. C. D. E.C
From the hypothesis, this is a one tailed test. Since alpha is 0.05. We have 0.05, which gives us a z value of +/1.645. From the Ho we see that the rejection region lies to the right of the mean, so the critical value is +1.645.