The Average Gasoline Price of One of the Major Oil $\sigma$

question 32

Essay

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 ( $\sigma$ ) 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:

Informational Needs

The specific data and insights required by individuals or organizations to make informed decisions.

Financial Accounting Standards Board

An independent, private-sector body that establishes and interprets Generally Accepted Accounting Principles (GAAP) in the United States.

IRS

The IRS (Internal Revenue Service) is the United States federal agency responsible for collecting taxes and administering the Internal Revenue Code.

SEC

The Securities and Exchange Commission (SEC) is a U.S. government agency that oversees securities transactions, activities of financial professionals and mutual fund trading to prevent fraud and intentional deception.