QUESTION 5 Raftelis Financial Consulting reported that the mean quarterly water

Question

QUESTION 5

Raftelis Financial Consulting reported that the mean quarterly water bill in the United States by public utilities was $47.50. An economist pointed out that privatization does not equal competition and monopoly powers provided to public utilities are now being transferred to private companies. The concern is that consumers end up paying higher than average rates for water provided by private companies. The water system for Atlanta, Georgia, is provided by a private company. A sample of 64 Atlanta consumers showed a mean quarterly water bill of $51 with a sample standard deviation of $12. At ? = .05 does the Atlanta sample support the conclusion that above average rates exist for this private water system? What is the correct hypothesis test?

QUESTION 6

Perform the hypothesis test for Question 5. Do you accept or reject the null hypothesis?

Accept

Reject

Explanation / Answer

Hypothesis:
H0 : mu = 47.5
Ha ; mu > 47.5

6)

Test statistics:

z = ( x - mean)/(s/sqrt(n))
= ( 51 - 47.5)/(12/sqrt(64))
= 2.3333

p value = 0.0098

we reject the null hypothesis

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