Question

5. Suppose a recent report claims that the average cost of a new car is $34,000. We collect a random sample of new car prices from kellybluebook.com in order to determine whether the actual average cost is less than that. We find the average cost of the cars in our sample is $27,375 The graph below shows 1000 simulated samples from the null distribution when testing whether the average cost is less than $34,000. Shade in the part of the graph representing the p-value, and then estimate the p-value Randomization Dotplot of x. Null hypothesis: 34000 samples 1000 mean 34053.781 std. error- 2457.133 Left Tail Two-Tail Right Tail 50 40 30 20 10 26000 28000 30000 32000 38000 42000 ull 34000

Answer 1

Question 5

Here there are 1000 samples

sample mean = $ 27375

hypothesized population mean = $ 34000

standard errro = 2437.133

H₀ : = $ 34000

H_a : < $ 34000

Here as from the dot plot, there are only 2 dots of 1000 that are in the left side of $ 27375

so here p - value = 2/1000 = 0.002

so here p - value < 0.05 (significance level) so we would reject the null hypothesis and concude that average cost of a new car is less than $ 34000.