In 2005, a researcher found that Ethiopia had the highest GDP growth rate in their population that year.

The researcher is interested to know whether the GDP rates grow as the country becomes richer based on the population’s individual annual income. She established that the average individual annual income in Ethiopia increased to $350 with a standard deviation of $12. To authenticate her findings, she selected a random sample of 10 individual’s average annual income and assumes that it is normally distributed. The data are recorded as follows:

Annual Individual Income ($)

255 313 374 218 174 296 359 408 195 452

a. Using the information provided, conduct an appropriate test for the mean individual annual income at a 5% significance level.

b. Conduct an appropriate test for the standard deviation of individual annual income at a 5%

significance level.

c. Based on the hypothesis testing in parts a and b, what conclusion can be made by the researcher?