B. An economist wishes to determine whether people are driving more than in the past. In one region of the country the number of miles driven per household per year in the past was 18.59 thousand miles. A sample of 35 households produced a sample mean of 16.23 thousand miles for the last year, with sample standard deviation 4.06 thousand miles. Assuming a normal distribution of household driving distances per year, perform the relevant test at the 5% level of significance. 1. What are the hypotheses? 2. Is it two-tailed test or one-tailed test? 3. What is the level of significance? 4. Is the population standard deviation known or unknown? 5. What appropriate test statistic (z-test or t-test) can you use? 6. Based on the level of significance, hypothesis test, and test statistic, what is the critical value? 7. Draw the rejection region.
