Reference no: EM132581298

All work must be shown step by step. When using Excel for calculations list the Excel functions used and when they were used and explain how you arrived at the answers. Attach the Excel file.

Annual expenditures for medication was $838 per person in the Northeast of the country. A sample of 60 individuals in the Midwest showed a per person annual expenditure for medication of $745. Suppose the population standard deviation is $300. Follow the steps below to develop a hypothesis test to determine whether the sample data support the conclusion that the population annual expenditure for medication per person is lower in the Midwest than in the Northeast.

1. Formulate the null and alternative hypotheses. State whether this is a one-tailed test (and if so, upper or lower tail) or a two-tailed test.

2. Suppose the significance level is . Explain what this means.

3. Calculate the test statistic. (Hint: Is known or unknown?)

4. Calculate the p-value and make a decision to either reject or to fail to reject .

5. Calculate the critical value(s). Use the test statistic then to make a decision to either reject or to fail to reject .

6. State what your decision means in the context of the problem (Medication expenditure in the Midwest vs. the Northeast).