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Answer:
The significance level α is 0.02.
Step-by-step explanation:
A hypothesis test for single mean can be performed to determine whether the average starting salary for a 21-25 year old college grad exceeds $52,000 per year.
The hypothesis is defined as follows:
<em>H₀</em>: The average starting salary for a 21-25 year old college grad does not exceeds $52,000 per year, i.e. <em>µ</em> ≤ 52,000.
<em>Hₐ</em>: The average starting salary for a 21-25 year old college grad exceeds $52,000 per year, i.e. <em>µ</em> > 52,000.
The information provided is:
<em>σ</em> = $5,745
<em>n</em> = 65
Also, if then the null hypothesis will be rejected.
Here, we need to compute the value of significance level <em>α</em>, the type I error probability.
A type I error occurs when we reject a true null hypothesis (H<em>₀</em>).
That is:
<em>α</em> = P (type I error)
<em>α</em> = P (Rejecting H<em>₀</em>| H<em>₀</em> is true)
*Use a <em>z</em>-table for the probability.
Thus, the significance level α is 0.02.
