In recent years, a number of companies have been formed that offer competition to AT&T in long-distance calls. All advertise that their rates are lower than AT&T's, and as a result their bills will be lower. AT&T has responded by arguing that for the average consumer there will be no difference in billing. Suppose that a statistics practitioner working for AT&T determines that the mean and standard deviation of monthly long-distance bills for all its residential customers are $17.09 and $3.87, respectively. He then takes a random sample of 100 customers and recalculates their last month's bill using the rates quoted by a leading competitor. Assuming that the standard deviation of this population is the same as for AT&T, can we conclude at the 5% significance level that there is a difference between the average AT&T bill and that of the leading competitor? Compute the value of the test statistics.
In recent years, a number of companies have been formed that offer competition to AT&T in long-distance calls. All advertise that their rates are lower than AT&T's, and as a result their bills will be lower. AT&T has responded by arguing that for the average consumer there will be no difference in billing. Suppose that a statistics practitioner working for AT&T determines that the mean and standard deviation of monthly long-distance bills for all its residential customers are $17.09 and $3.87, respectively. He then takes a random sample of 100 customers and recalculates their last month's bill using the rates quoted by a leading competitor. Assuming that the standard deviation of this population is the same as for AT&T, can we conclude at the 5% significance level that there is a difference between the average AT&T bill and that of the leading competitor? Compute the value of the test statistics.
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