11) The Fair Isaac Corporation (FICO) credit score is used by banks and other lenders to determine whether someone is a good credit risk. Scores range from 300 to 850, with a score of 720 or more indicating that a person is a very good credit risk. An economist wants to determine whether the mean FICO score is lower than the cutoff of 720. She finds that a random sample of 50 people had a mean FICO score of 707 with a standard deviation of 79. Can the economist conclude that the mean FICO score is less than 720? Use the 0.01 level of significance and the P-value method. (a) State the appropriate null and alternate hypotheses. (b) Compute the value of the test statistic. (c) State a conclusion.

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter4: Equations Of Linear Functions
Section: Chapter Questions
Problem 8SGR
icon
Related questions
Question
11)
The Fair Isaac Corporation (FICO) credit score is used by banks and other lenders to determine
whether someone is a good credit risk. Scores range from 300 to 850, with a score of 720
or more indicating that a person is a very good credit risk. An economist wants to determine
whether the mean FICO score is lower than the cutoff of 720. She finds that a random sample of
50 people had a mean FICO score of 707 with a standard deviation of 79. Can the economist
conclude that the mean FICO score is less than 720? Use the 0.01
level of significance and the P-value method.
(a) State the appropriate null and alternate hypotheses.
(b) Compute the value of the test statistic.
(c) State a conclusion.
Transcribed Image Text:11) The Fair Isaac Corporation (FICO) credit score is used by banks and other lenders to determine whether someone is a good credit risk. Scores range from 300 to 850, with a score of 720 or more indicating that a person is a very good credit risk. An economist wants to determine whether the mean FICO score is lower than the cutoff of 720. She finds that a random sample of 50 people had a mean FICO score of 707 with a standard deviation of 79. Can the economist conclude that the mean FICO score is less than 720? Use the 0.01 level of significance and the P-value method. (a) State the appropriate null and alternate hypotheses. (b) Compute the value of the test statistic. (c) State a conclusion.
Expert Solution
steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Recommended textbooks for you
Glencoe Algebra 1, Student Edition, 9780079039897…
Glencoe Algebra 1, Student Edition, 9780079039897…
Algebra
ISBN:
9780079039897
Author:
Carter
Publisher:
McGraw Hill
College Algebra (MindTap Course List)
College Algebra (MindTap Course List)
Algebra
ISBN:
9781305652231
Author:
R. David Gustafson, Jeff Hughes
Publisher:
Cengage Learning