Question

20. Annual expenditure for prescription drugs was $838 per person in the Northeast of the country Hospital Care Cost Institute website, November 7, 2012). A sample of 60 individuals in the Midwest showed a per person annual expenditure for prescription drugs of $745. Use a popu- lation standard deviation of $300 to answer the following questions. a. 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. b. What is the value of the test statistic? c. What is the p-value? d. Ata .01, what is your conclusion?

Answer 1

Q.20) Given that, sample size ( n ) = 60

sample mean = $745

population standard deviation = $300

a) The null and the alternative hypotheses are,

b) Test statistic is,

x-μ 745-838 00 =-2.40 Vn

Test statistic is, z = -2.40

c) p-value = P(Z < -2.40) = 0.0082

p-value = 0.0082

d) Here, p-value = 0.0082 <

So, we reject the null hypothesis ( H₀).

Conclusion: there is sufficient evidence to support the claim that the population annual expenditure for prescription drugs per person is lower in the Midwest than in the Northeast.