A restaurant o w n er is con cern ed a b o u t th e con sisten cy of b u sin e s s. He w a n t s t o d e t e r m in e if t h e s ta n d a r d d e v ia tio n o f t h e profits for e a c h w e e k is less th an $ 3 0 0 . The profits from last w e e k are listed b elo w (in dollars). A ssu m e that profits are normally distributed.

1,825 1,642 1,675 1,553 1,925 2,037 1,902

a. State th e appropriate null and alternative h yp otheses for th e test.

b. C o m p u t e t h e v a lu e o f t h e t e s t statistic.

c. Use th e critical value approach to test th e owner's concern at a = 0.01.

d. Repeat th e test at a = 0 . 1 0 . P-399