Question

The average household income for a recent year was $30,000. five years earlier the average household income was $24,500. assume sample sizes of 34 were used and the population standard deviation of both samples were $5928. at 5% level of significance is there enough evidence to believe that the average household income has increased?

Answer 1

Using hypothesis test, we conclude that there is evidence to believe that the average household income has increased.

According to the question,

The average household income for a recent year (x₁⁻) = $30,000

The average household income for a recent year (x₂⁻) = $24,500

sample sizes n₁ = n₂ = 34

standard deviation of both samples were $24,500. Thus, s₁ = s₂ = $5928.

Null hypothesis:  There is no evidence to believe that the average household income has increased.

H₀ : μ₁ ≤ μ₂

Alternative hypothesis:  There is evidence to believe that the average household income has increased.

H₁: μ₁ > μ₂  

To check hypothesis we have the formula

Standard error=  $\sqrt{\frac{s_{1} ^{2} }{n_{1} } + \frac{s^{2} _{2} }{n_{2} } }$

= $\sqrt{2067128.4706}$

= 1437.7512

Thus, standard error is $1437.7512.

Formula for test statistic = [(x₁⁻ -  x₂⁻) - (μ₁ - μ₂)]/standard error

= [(30000 -  24500) - 0]/1437.7512

= 3.8254

The critical value of z at 5% level of significance is 1.6449.

Here, the calculated value is greater than the critical value so we reject H₀.

Hence using hypothesis test, we conclude that there is evidence to believe that the average household income has increased.

Learn more about hypothesis test here

brainly.com/question/15060525

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