Chapter 11.2, Problem 17E

Repair Costs as Automobiles Age. In its 2016 Auto Reliability Survey, Consumer Reports asked subscribers to report their maintenance and repair costs. Most individuals are aware of the fact that the average annual repair cost for an automobile depends on the age of the automobile. A researcher is interested in finding out whether the variance of the annual repair costs also increases with the age of the automobile. A sample of 26 automobiles 4 years old showed a sample standard deviation for annual repair costs of $170 and a sample of 25 automobiles 2 years old showed a sample standard deviation for annual repair costs of $100.

1. a. State the null and alternative versions of the research hypothesis that the variance in annual repair costs is larger for the older automobiles.
2. b. At a .01 level of significance, what is your conclusion? What is the p-value? Discuss the reasonableness of your findings.