Thread: testing hypothesis question

A fast food franchiser is considering building a restaurant at a certain location. According to a financial analysis, a site is acceptable only if the number of pedestrians passing the location averages more than 100 per hour. A random sample of 50 hours produced x bar = 110 and s = 12 pedestrians per hour.

a) Do these data provide sufficient evidence to establish that the site is acceptable? Use a = 0.05.

b) What are the consequences of Type 1 and Type 2 errors? Which error is more expensive to make?

first of all, how do I start this question, is it the same as making null hypothesis and alternative hypothesis here?

Originally Posted by wopashui

A fast food franchiser is considering building a restaurant at a certain location. According to a financial analysis, a site is acceptable only if the number of pedestrians passing the location averages more than 100 per hour. A random sample of 50 hours produced x bar = 110 and s = 12 pedestrians per hour.

a) Do these data provide sufficient evidence to establish that the site is acceptable? Use a = 0.05.

b) What are the consequences of Type 1 and Type 2 errors? Which error is more expensive to make?

first of all, how do I start this question, is it the same as making null hypothesis and alternative hypothesis here?

What are you trying to establish? Its negation would make a good candidate for the null hypothesis. In this case that would give a null hypothesis that the site was not acceptable.

CB

CB