1. In recent years the interest rate on home mortgages has declined to less than 6.0 percent. However, according to a study by Federal Reserve Board the rate charge on credit card debit is more than 14 percent. Listed below is the interest rate charged on a sample of 10 credit cards.
|14.6 16.7 17.4 17.0 17.8 15.4 13.1 15.8 14.3 14.5 |

Is it reasonable to conclude the mean rate charged is greater than 14 percent? Use the 0.01 significance level.
Solution

[pic][pic]: μ ( 14 [pic]: μ > 14 [pic]=15.66 s=1.544 t[pic]=[pic]=3.4 Critical value t[pic]=2.821 Since 3.4>2.821, reject [pic] at [pic]=0.01 significance level and we conclude the mean rate charged is greater than 14 percent.

2. The Watch Corporation of Switzerland claims that their watches on average will neither gain nor lose time during a week. A sample of 18 watches provided the following gains(+) or losses(-) in seconds per week.
|-0.38 -0.20 -0.38 -0.32 +0.32 -0.23 +0.30 +0.25 -0.10 |
|-0.37 -0.61 -0.48 -0.47 -0.64 -0.04 -0.20 -0.68 +0.05 |

Is it reasonable to conclude the mean gain or loss in time for the watches is 0? Use the 0.05 significance level.
Solution
[pic]: μ =0 [pic]: μ [pic]0 [pic]=-0.232 s=0.312 t[pic]=[pic]=-3.155 critical value: [pic]t[pic]=[pic]2.11 Since -3.1551.285, reject [pic] at 0.1 significance level and suggest that 20% of condominium owners moved in the Dallas area.

4. A coffee manufacture is interested in whether the mean daily consumption of regular coffee drinker is less than that of decaffeinated-coffee drinkers. A random