Question

HYPOTHESIS
Calculate the test statistic.
Using α=0.05, determine the critical region and hence write the appropriate decision rule.

Table 1: Average fees for a Full-Service Funeral (n=36)
7.4 9.4 5.3 8.4 7.5 6.5 6.2 8.3 6.7
11.6 6.3 5.9 6.7 5.8 5.2 6.4 6 7.4
7.2 6.6 6.3 5.3 6.6 5.6 8.4 7.2 7.4
5.8 6.3 6.1 7 7.2 6.1 5.4 7.4 6.6

Answer 1

It is believed that with the increase in the number of citizens dying from violent incidence, car accidents and other causes, funeral homes have increased the cost of a full-service funeral package in order to maximise their revenue. As a result, to test this belief, a study was commissioned to compare the 2005 average results with those for this year, 2006.
According to the National Funeral Directors Association (NFDA), the nation’s 22,000 funeral homes collected an average of $6,500 per full-service funeral in 2005 (NFDA Fact Sheet, 2006). A random sample of 36 funeral homes reported revenue data for 2006. Among other measures, each reported its average for a full-service funeral. These data (in thousands of dollars) are shown in Table 1, rounded to the nearest hundred.

Answer 2

What are the appropriate null and alternative hypotheses to test whether the average full-service fee of funeral homes in your country in 2006 exceeds $6,500?

Calculate the test statistic.

Using α=0.05, determine the critical region and hence write the appropriate decision rule.

Determine whether the sample data provide sufficient evidence to conclude that the average fee in 2006 was higher than 2005. Please state your conclusion & also what has also led you to that conclusion.