Hypothesis Test Paper

Topics: Null hypothesis, Statistical hypothesis testing, Statistics Pages: 5 (1466 words) Published: October 17, 2011
Inflation in the United States is at an all-time high. The recession of the U.S. economy only hinders people more with high gas prices. A one population test using the One Factor ANOVA test and a five-step hypothesis test can be used to determine if gas prices are equally high in many different states. The samples used to test the hypothesis come from data collected from 30 randomly selected gas stations in six different cities. The hypothesis test and some solutions to consider may have an effect on direct and indirect stakeholders and is very important to the economy as a whole. Data Points

Salt Lake cityWythevilleLos AngelesScherervilleMiltonRichmond TinaSheriJeanJenniferKimJanet

The purpose of this research is to identify trends and differences in gas prices in various regions of the United States. Gas prices vary across the country, and continually rise and fall, trending as the economy improves and worsens. The increase and decrease of gas prices depend on how well the economy is at the time, and can affect each of its stakeholders differently. The hypothesis is that gas prices, although they vary across the nation, will remain fairly equal in many different regions of the United States. Stakeholders

Gas is the number one resource in fueling business productivity and profitability. Stakeholders in the gasoline industry such as BP, Exxon, Shell, and Mobile are just a few giant companies that can regulate the price of gas. Many of these companies also influence how they affect the stock market. Usually, when the price of oil increases, the price of gas goes up and prices in the stock market decrease.

Another major stakeholder, the independent owner/operator of a gas station has the ability to control and regulate prices within his own business. Lowering or raising gas prices determines how consumers react. As the price of gas rises, consumers cut back on trips to the store or long distance vacations. Automobile manufacturers also feel the crunch when gas prices increase and consumers shy away from unnecessary spending.

With the fluctuating prices of gasoline, indirect stakeholders, such as low income consumers and retailers suffer the greatest impact. Retailers feel the impact through lost sales. Retailers also feel the impact through price increases in delivery charges from vendors and distributors due to rising fuel prices. Vendors and distributors need to administer a fuel charge to deliveries to balance the amount of fuel used in delivery vehicles. Five-Step Hypothesis Testing

The purpose of a one-population test is to define a population mean, (µ) when the population standard deviation (σ) is known. By calculating the population sample of thirty data points, the mean price of gas is determined to be $3.61.

To perform the one-population hypothesis test, we must first generate the null and alternate hypothesis for our hypothesis statement. The null hypothesis (H0) says that all of the populations are equal and the alternate hypothesis (H₁) says that these populations are not equal. The hypothesis statement would look like this:

H0: μ₁=μ₂=μ₃…=μ₆
H₁: µ₁ ≠ the entire population means
The standard level of significance (α) at .05 or 5% is used with the F-ratio statistic in determining if the null hypothesis is correct. The formula to find the F value, using the degrees of freedom (df), figures the numerator by (k-1), and the denominator by (N-k). N is the total number of observations, 30 in this sample, k is the number of groups, six in this sample. The F table in Appendix F of Applied Statistics has a table of critical values, necessary to complete the test (Doane & Seward, 2007). The numerator in this case is (k-1 or 6-1) 5. The...
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