I. Formulate hypotheses for a test to determine whether the sample data support the conclusion that the population annual expenditure for prescription drugs per person is lower in the Midwest than in the Northeast and Identify whether it is a two-tail test or a one tail test (Left or right tail). II. Decide the suitable test statistics and justify your selection. III. Calculate the value of the relevant test statistics and identify the P value IV. Based on the p value in part (III), at 99% confidence level, decide the decision criteria. V. Make the final conclusion based on the analysis.
According to the Annual survey of drugs expenditure in country X, the annual expenditure for
prescription drugs is $838 per person in the Northeast region of the country. A sample of 60 individuals
in the Midwest shows a per person expenditure for prescription drugs of $745. Further, it is given that
the population standard deviation of $300.
I. Formulate hypotheses for a test to determine whether the sample data support the
conclusion that the population annual expenditure for prescription drugs per person is lower
in the Midwest than in the Northeast and Identify whether it is a two-tail test or a one tail test
(Left or right tail).
II. Decide the suitable test statistics and justify your selection.
III. Calculate the value of the relevant test statistics and identify the P value
IV. Based on the p value in part (III), at 99% confidence level, decide the decision criteria.
V. Make the final conclusion based on the analysis.
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