At a recent meeting it was decided to go ahead with the introduction of a new product if

“interested consumers would be willing, on average, to pay $20.00 for the product.” A study was conducted, with 315 randomly interested consumers indicating they would pay an average of

$18.14 for the product. The standard deviation of the prices in the sample was $2.98.

a. State the null and alternative hypothesis.

b. What is the appropriate managerial action?

c. How would the problem change if the sample size was 20, yet the average and standard deviation stayed the same? What are the implications of this question?

d. With a sample size of 20 and a sample standard deviation of $2.98, how would the average have to change before changing the managerial decision?