61 Refer to the Baseball 2010 data which report information

61. Refer to the Baseball 2010 data, which report information on the 30 Major League Baseball teams for the 2010 season.

a. Conduct a test of hypothesis to determine whether the mean payroll of the teams was different from $80.0 million. Use the .05 significance level.

Solution

H0: mu = 80, H1: Mu is not equal to 80. This is a 2 tail test.
The test statistic is,
(91.01667 - 80)*30^.5/ 38.25954 = 1.577144

The critical value will be 1.96, we use a z test since 1.577 < 1.96 we accept the null hypothesis the mean payroll is not different from 80 million