A joint project of the U.S. Census Bureau and the National Science Foundation shows that people with a bachelor’s degree who transferred from a community college earn less than those who start at a four-year school (USA TODAY, March 17, 2009). Previous studies referred to this occurrence as a “community college penalty.” Lucille Barnes uses the following information to determine if a similar pattern applies to her university. She believes that the population standard deviation is $4,400 for graduates with an associate degree and $1,500 for graduates with no associate degree.

Bachelor’s Degree with Associate Degree Bachelor’s Degree with No Associate Degree

1 = $52,000.............
2 = $54,700

n1 = 100 ..............n2 = 100

a. Set up the hypotheses to test if the report’s conclusion also applies to Lucille’s university.

b. Calculate the value of the test statistic and its p-value.

c. At the 5% significance level, can we conclude that there is a “community college penalty” at Lucille’s university?