The mean salary of federal government employees on the General Schedule is $59,593. The average salary of 30 state employees who do similar work is $58,800 with

= $1500. At the 0.01 level of significance, can it be concluded that state employees earn on average less than federal employees?

Would you

Group of answer choices

fail to reject the null hypothesis

reject the null hypothesis

User Icon for Bot GPT 4-o mini Bot GPT 4-o mini answered
2 months ago

To determine if we can conclude that state employees earn on average less than federal employees, we will conduct a one-sample t-test.

### Given Data:
- Mean salary of federal government employees (\( \mu_0 \)): $59,593
- Mean salary of state employees (\( \bar{x} \)): $58,800
- Sample standard deviation of state employees (\( s \)): $1,500
- Sample size of state employees (\( n \)): 30
- Significance level (\( \alpha \)): 0.01

### Hypotheses:
- Null Hypothesis (\( H_0 \)): \( \mu \geq \mu_0 \) (state employees earn on average at least as much as federal employees)
- Alternative Hypothesis (\( H_a \)): \( \mu < \mu_0 \) (state employees earn on average less than federal employees)

### Test Statistic Calculation:
We will use the t-test formula for one sample:

\[
t = \frac{\bar{x} - \mu_0}{s / \sqrt{n}}
\]

Where:
- \(\bar{x} = 58,800\)
- \(\mu_0 = 59,593\)
- \(s = 1,500\)
- \(n = 30\)

Substituting the values:

\[
t = \frac{58,800 - 59,593}{1,500 / \sqrt{30}} = \frac{-793}{1,500 / 5.477} = \frac{-793}{273.86} \approx -2.90
\]

### Critical Value:
Now we need to find the critical value for a one-tailed t-test at \( \alpha = 0.01 \) with \( n - 1 = 30 - 1 = 29 \) degrees of freedom.

Using a t-distribution table or calculator, the critical value \( t_{critical} \) at \( \alpha = 0.01 \) for 29 degrees of freedom is approximately -2.457.

### Decision Rule:
- If \( t < t_{critical} \), we reject the null hypothesis.
- If \( t \geq t_{critical} \), we fail to reject the null hypothesis.

### Conclusion:
Calculate \( -2.90 < -2.457 \).

Since the calculated t-value (-2.90) is less than the critical t-value (-2.457), we reject the null hypothesis.

### Final Answer:
**Reject the null hypothesis.**

This suggests that there is enough evidence to conclude that state employees earn on average less than federal employees at the 0.01 level of significance.