A rental agency claims that the average rent that small business establishments pay in Suva city is $800. A sample of 10 establishments shows an average rate of $20. At alpha = 0.05, there enough evidence to reject the agencies claim? Assume that the population is approximately normally distributed.

Answer 1

Are you missing a zero in the second rate?

Z = (score-mean)/SEm

SEm = SD/√n

Find table in the back of your statistics text labeled something like "areas under normal distribution" to find the proportion/probability related to the Z score. Is it less than .05?