A company’s auditor believes the per diem cost in Nashville, Tennessee, rose significantly between 2001 and 2011. To test this belief, the auditor samples 51 business trips from the company’s records for 2001; the sample average was $190 per day, with a population standard deviation of $18.50. The auditor selects a second random sample of 47 business trips from the company’s records for 2011; the sample average was $198 per day, with a population standard deviation of $15.60. If he uses a risk of committing a Type I error of .01, does the auditor find that the per diem average expense in Nashville has gone up significantly?
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