An Airline Claims That the Median Price of a Round-Trip

question 110

Essay

An airline claims that the median price of a round-trip ticket is less than $503. For a random sample of 400 tickets, the value of the Wilcoxon sign-ranks test is T = T⁺ = 37,230.
A) Specify the competing hypothesis to determine whether the median ticket price is less than $503.
B) Assume the normal approximation for the distribution of T, and calculate the value of the corresponding test statistic.
C) At the 10% significance level, what is the decision and conclusion?

• A) Specify the competing hypothesis to determine whether the median ticket price is less than $503.
• B) Assume the normal approximation for the distribution of T, and calculate the value of the corresponding test statistic.
• C) At the 10% significance level, what is the decision and conclusion?

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Definitions:

Commission

A fee or percentage awarded to an individual or group for performing a service or facilitating a transaction.

Required Deduction

A mandatory subtraction from gross income, such as taxes or social security contributions, which lowers taxable income.

Unemployment Tax

A tax imposed by governments on employers based on the wages paid to employees, used to fund unemployment compensation programs.

FICA Tax

A federal tax in the United States, consisting of a Social Security tax and a Medicare tax, deducted from employees' paychecks to fund these programs.