# Question

Customers at Costco spend an average of $130 per trip (The Wall Street Journal, October 6, 2010). One of Costco’s rivals would like to determine whether its customers spend more per trip. A survey of the receipts of 25 customers found that the sample mean was $135.25. Assume that the population standard deviation is $10.50 and that spending follows a normal distribution.

a. Specify the appropriate null and alternative hypotheses to test whether average spending at the rival’s store is more than $130.

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

c. At the 5% significance level, what is the conclusion to the test?

d. Repeat the test using the critical value approach.

a. Specify the appropriate null and alternative hypotheses to test whether average spending at the rival’s store is more than $130.

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

c. At the 5% significance level, what is the conclusion to the test?

d. Repeat the test using the critical value approach.

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