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You read in a U.S Census Bureau report that a 90% confidence interval for the median...

You read in a U.S Census Bureau report that a 90% confidence interval for the median income in 2012 of American households was $51,017 (+ or -) $343. Based on this interval, can you reject the null hypothesis that the median income in this group is $50,000 using test statistics? What is the alternative hypothesis of the test? What is its significance level?

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Answer #1

The 90% confidence interval for the median income in 2012 of American households was $51,017 (+ or -) $343 = (50674, 51360)

The 90 % confidence interval does not include the value $50,000. Hence we reject the null hypothesis that the median income in this group is $50,000.

The alternative hypothesis is:

H1: The median income is not $50,000

The significance level is 0.10

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