Consider the following hypothesis H0 average cost per stay i

Consider the following hypothesis. H0: average cost per stay in a large hospital is $6,200, and H1: average cost per stay is $5,600, to be tested at the 95 percent level of confidence. A sample of one hundred and twenty records has been selected and assessed for cost. The standard deviation of the costs is $3,100.

Is alpha known in principle? If yes, can its value be stated from the information given? If yes, what is the alpha?

Is beta known in principle? If yes, can its value be stated from the information given? If yes, what is beta?

Solution

Yes, its value can be stated from the information. The value of alpha is the upper limit of the rejection when the null hypothesis is true.

So, the alpha is 0.05

Yes, its value can be stated from the information. The value of beta is the accept the null hypothesis when alternative is true. So, the value is 0.05

So, the alpha is 0.05