The Average Gasoline Price of One of the Major Oil

question 11

Short Answer

The average gasoline price of one of the major oil companies has been $2.20 per gallon. Because of cost reduction measures, it is believed that there has been a significant reduction in the average price. In order to test this belief, we randomly selected a sample of 36 of the company's gas stations and determined that the average price for the stations in the sample was $2.14. Assume that the standard deviation of the population σ) is $0.12.
a. State the null and the alternative hypotheses.
b. Compute the test statistic.
c. What is the p-value associated with the above sample results?
d. At 95% confidence, test the company's claim.

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Definitions:

Face Value

The nominal value or dollar value of a security stated by the issuer.

Contract Rate

The agreed-upon interest rate specified in a contract, often related to loans or financial agreements.

Market Rate

The prevailing rate of interest available on investments or the average cost of borrowing money in the market.

Issued

The process of making securities available for sale to the public or the amount of a product or securities distributed to the public.