A bank wonders whether omitting the annual credit card fee for customers who charge at least $3000 in a year will increase the amount charged on its credit cards. The bank makes this offer to an SRS of 400 of its credit card customers. It then compares how much these customers charge this year with the amount that they charged last year. The mean increase in the sample is $246, and the standard deviation is $112. Is there significant evidence at the 1% level that the mean amount charged increases under the no-fee offer? State H0 and Ha and carry out a significance test.
Continuous Probability Distributions
Probability distributions are of two types, which are continuous probability distributions and discrete probability distributions. A continuous probability distribution contains an infinite number of values. For example, if time is infinite: you could count from 0 to a trillion seconds, billion seconds, so on indefinitely. A discrete probability distribution consists of only a countable set of possible values.
Normal Distribution
Suppose we had to design a bathroom weighing scale, how would we decide what should be the range of the weighing machine? Would we take the highest recorded human weight in history and use that as the upper limit for our weighing scale? This may not be a great idea as the sensitivity of the scale would get reduced if the range is too large. At the same time, if we keep the upper limit too low, it may not be usable for a large percentage of the population!
A bank wonders whether omitting the annual credit card fee for customers who charge at least $3000 in a year will increase the amount charged on its credit cards. The bank makes this offer to an SRS of 400 of its credit card customers. It then compares how much these customers charge this year with the amount that they charged last year. The mean increase in the sample is $246, and the standard deviation is $112. Is there significant evidence at the 1% level that the mean amount charged increases under the no-fee offer? State H0 and Ha and carry out a significance test.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
