Question

A bank wonders whether omitting the annual credit card fee for customers who charge at least $4000 in a year would increase the amount charged on its credit card. The bank makes this offer to an SRS of 91 of its existing credit card customers. It then compares how much these customers charge this year with the amount that they charged last year. The mean increase is $385, and the standard deviation is $128.

• Is there significant evidence at the 5% level that the mean amount charged increases under the no-fee offer? Carry out a one-sample t test. (Please provide all the ingredients of hypothesis testing. That is, define the population parameter of interest in symbols and in words, state the null and alternative hypotheses, give the test statistic and its distribution under the null hypothesis, compute the observed value of the test statistic and p-value (with helpful drawing), draw a conclusion, and interpret the results in the context of the study.)

Answer 1