Suppose that someone claims that the median salary for indiv

Suppose that someone claims that the median salary for individuals in New Jersey with a business degree is at $85,000 or more. You feel that that is too high, so you collect a sample of 160 such individuals and find that 95 of them earn less than $85,000 and the other 65 earn more than that.

Using a significance level of 0.05, what is/are the critical value(s) for this hypothesis test?

-1.96 and +1.96

-1.64 and +1.64

-1.64

+1.64

Continuing with the previous question (about NJ individuals with business degrees), what is the sample value of the test statistic?

-2.29

-1.64

0.37

4.03

Solution

Since the sample size is large, we use the normal disitrbution for testing. In this distribution, mean=median.

the critical vlue is 1.645.

test statistic is

Z=n/2-S/sqrt(n*0.5*0.5)

S=95 number of values <median

z=-2.29