MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN: 9781119256830
Author: Amos Gilat
Publisher: John Wiley & Sons Inc
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**Title: Analysis of Credit Card Balance Among College Students**

**Introduction:**
A report examining how American college students manage their finances includes data from a survey. In this survey, each of the 793 students was asked if they owned credit cards and whether they paid the balance in full monthly. Among these, 500 students confirmed full payment each month. The reported average credit card balance for these students was $825, with an estimated sample standard deviation of $195. The overall reported average for all college students with credit cards is $906. This exercise tests the hypothesis that students paying off their balance monthly have a lower mean balance than $906, using a significance level of 0.01.

**Hypotheses:**
Choose the appropriate null (H₀) and alternative (Hₐ) hypotheses:

- \( H_0: \mu = 906 \)
- \( H_a: \mu < 906 \)

**Test Statistic and P-value Calculation:**
Use statistical tables or technology tools to determine the test statistic (t) and P-value, rounding the test statistic to one decimal place and the P-value to three decimal places.

**Conclusion:**
Determine the conclusion based on the hypothesis test:

- Fail to reject \( H_0 \): Insufficient evidence that mean balance is lower than $906.
- Reject \( H_0 \): Sufficient evidence that mean balance is lower than $906.

**Notes:**
Refer to the appendix for relevant tables that aid in solving this problem.
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Transcribed Image Text:**Title: Analysis of Credit Card Balance Among College Students** **Introduction:** A report examining how American college students manage their finances includes data from a survey. In this survey, each of the 793 students was asked if they owned credit cards and whether they paid the balance in full monthly. Among these, 500 students confirmed full payment each month. The reported average credit card balance for these students was $825, with an estimated sample standard deviation of $195. The overall reported average for all college students with credit cards is $906. This exercise tests the hypothesis that students paying off their balance monthly have a lower mean balance than $906, using a significance level of 0.01. **Hypotheses:** Choose the appropriate null (H₀) and alternative (Hₐ) hypotheses: - \( H_0: \mu = 906 \) - \( H_a: \mu < 906 \) **Test Statistic and P-value Calculation:** Use statistical tables or technology tools to determine the test statistic (t) and P-value, rounding the test statistic to one decimal place and the P-value to three decimal places. **Conclusion:** Determine the conclusion based on the hypothesis test: - Fail to reject \( H_0 \): Insufficient evidence that mean balance is lower than $906. - Reject \( H_0 \): Sufficient evidence that mean balance is lower than $906. **Notes:** Refer to the appendix for relevant tables that aid in solving this problem.
Expert Solution
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Step 1

The appropriate null and alternative hypotheses are given below:

Here, µ is the true mean balance.

Null hypothesis, H0: µ=$906

Alternative hypothesis, H1: µ<$906

Here, the level of significance is 0.01.

Degrees of freedom: 499 (=500–1)

Decision rule:

Reject H0 if P-value <level of significance.

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