Annual expenditures for prescription drugs was $838 per person in the Northeast of the country. A sample of 60 individuals in the Midwest showed a per person annual expenditure for prescription drugs of $745. Suppose the population standard deviation is $300. Follow the steps below to develop a hypothesis test to determine whether the sample data support the conclusion that the population annual expenditure for prescription drugs per person is lower in the Midwest than in the Northeast. Calculate the critical value(s). Use the test statistic then to make a decision to either reject or to fail to reject . State what your decision means in the context of the problem (prescription expenditure in the Midwest vs. the Northeast).

Question

Annual expenditures for prescription drugs was $838 per person in the Northeast of the country. A sample of 60 individuals in the Midwest showed a per person annual expenditure for prescription drugs of $745. Suppose the population standard deviation is $300. Follow the steps below to develop a hypothesis test to determine whether the sample data support the conclusion that the population annual expenditure for prescription drugs per person is lower in the Midwest than in the Northeast.

  1. Calculate the critical value(s). Use the test statistic then to make a decision to either reject or to fail to reject .
  2. State what your decision means in the context of the problem (prescription expenditure in the Midwest vs. the Northeast).

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