Students Who Graduated from College in 2010 with Student Loans

question 66

Essay

Students who graduated from college in 2010 with student loans owed an average of $25,250 (TheNew York Times,November 2,2011).An economist wants to determine if the average debt has increased since 2010.She takes a sample of 40 recent graduates and finds that their average debt was $28,275.Assume that the population standard deviation is $7,250.
a.Specify the competing hypotheses to determine whether the average undergraduate debt has increased since 2001.
b.Calculate the value of the test statistic and the p-value.
c.At the 5% significance level,can you conclude that the average undergraduate debt has increased? Explain.

---

Definitions:

State Of Nature

A concept in political philosophy used to describe the condition of humanity before the establishment of societal laws and norms.

Bayes Law

A principle that details the likelihood of a particular occurrence, taking into account previously understood circumstances that may have a connection to the occurrence.

Posterior Probabilities

The updated likelihoods of events or hypotheses upon considering fresh evidence or information.

Expected Monetary Value

A statistical technique in decision-making under uncertainty, calculating the weighted average of all possible outcomes, considering both the probabilities and the monetary impacts.