The average cost of tuition and room and board at a small pr

The average cost of tuition and room and board at a small private liberal arts college is reported to be $8,500 per term, but a financial administrator believes that the average cost is higher. A study conducted using 350 small liberal arts colleges showed that the average cost per term is $8,745. The population standard deviation is $1,200. Let ? = 0.05. What are the null and alternative hypotheses for this study?

Solution

The problem says \" a financial administrator believes that the average cost is higher\".

Thus, that is the claim, and that goes to the alternative hypothesis.

Also, note that the null hypothesis is the exact opposite of the alternative.

Thus,

Ho: u <= $8500
Ha: u > $8500 [ANSWER, OPTION D]