An economist conducted a hypothesis test to test the claim that the average cost of eating a

meal away from home decreased from 2012 to 2013. The average cost of eating a meal away

from home in 2012 was $7.15 per person per meal. Assume that all conditions for testing have

been met. The same economist took a sample of 30 individuals and determined that the

average cost of this sample was $6.95 with a standard deviation of $1.05. Use an = 0.05

Follow and answer the following accordingly.

a.

Set-up the null and alternative hypotheses. Write in correct notation. Specify if left-

tailed, right-tailed or two-tailed test.

b. Specify the significance level . Sketch your critical or rejection region.

c.

Gather your evidence. Specify the information derived from the sample.

d. Compute the appropriate test statistic.

e. Compute the critical value (classical approach)

f.

Compute the p-value (p-value approach)

g.

Decision criterion: Based on (e) or (f), specify your decision if reject or do not reject the

null hypothesis.

h. Write your conclusion. Make sure that it must be in the right context as indicated in the

problem.