• March 29th 2008, 11:25 AM
sweetkendra

An official with an elderly persons advocacy agency believes that the average monthly cost of medication used to control cholesterol has increased. A nathional study showed that the average monthly cost for the last 5 years for cholesterol control medication is $72.58 per month. The official selects a random sample of 50 elderly people who use medication to control cholesterol and finds the average cost to be$73.45 with a standard deviation of \$2.25. What type of hypothesis test should be performed? At a 0.05 level of significance, what is the critical value for the hypothesis test? At a 0.05 level of significance, what is the test value? The official should conclude that the average cost has increased----true or false?

• March 29th 2008, 02:55 PM
galactus
$H_{0}:{\mu}\leq{72.58}$

$H_{a}:{\mu}>72.58 \;\ (claim)$

$n=50, \;\ \overline{x}=73.45, \;\ s=2.25, \;\ {\alpha}=0.05$

The claim is that it is increasing, so running the right-tail test, we find that the test stat is 2.7341; the critical vlaue is

1.645, the p-value is .0043

We reject the null hypothesis. There is enough evidence at the .05 level to support the claim.

You will have to run the actual calculations. I have a very nice Excel Stats macro for running hypothesis tests, so I do not do the grunt work.
• March 30th 2008, 03:03 PM
sweetkendra
Thank you Galactus
Thank you for your help. A quick question though, if all the questions have the same endings--(such as what is the critical value, the test value, which hypothesis test should be performed and the conclusion is true) Are they all done the same way???

Any help will be appreciated.