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.