The average gasoline price at Chevron was $3.12 per gallon last month. Due to the recent nation-wide gas price drop, the chief marketing officer of Chevron believes that there has been a significant reduction in the average gas price. In order to test his belief, he randomly selected a sample of 36 of Chevron gas stations and found the average gas price of these stations was $3.06. Assume that the population standard deviation of the population is $0.12, and the significance level (α) is 5%.

1.) Step 1: Formulate the null and the alternative hypotheses:

H0:

Ha:

a.) H0: mu ≤ 3.06; Ha: mu > 3.06

b.) H0: mu ≥ 3.06; Ha: mu < 3.06

c.) H0: mu = 3.06; Ha: mu ≠ 3.06

d.) H0: mu ≤ 3.12; Ha: mu > 3.12

e.) H0: mu ≥ 3.12; Ha: mu < 3.12

f.) H0: mu = 3.12; Ha: mu ≠ 3.12

2.) What kind of test is this? (Upper-tailed, lower-tailed or two-tailed test)

a.)Upper-tailed

b.)Lower-tailed

c.) Two-tailed

3.) Step 2: Find the test statistic. Is this a z-score or a t-score? 

a.) z-score = -0.5 because population std is given to be $0.12

b.) z-score = - 3 because population std is given to be $0.12

c.) z-score = 3 because population std is given to be $0.12

d.) t-score = -0.5 because population std is not given, and the sample std is given to be $0.12

e.) t-score = - 3 because population std is not given, and the sample std is given to be $0.12

f.) t-score = 3 because population std is not given, and the sample std is given to be $0.12

4.)Critical Value Approach

Step 3: Using the critical value approach, what is the critical value?

a.) -1.645

b.) -1.688

c.) -1.690

d.) -1.960

e.) 1.645

f.) 1.688

g.) 1.690

h.) 1.960

5.)Critical Value Approach

What is your conclusion (reject or fail to reject the null)?

a.) Fail to reject the null

b.) Reject the null

c.) Accept the null

6.)P-Value Approach

Step 3: Using the p-value approach, what is the p-value?

a.)p-value = 0

b.)p-value = 0.0013

c.)p-value = 0.05

d.)p-value = -0.5

e.)p-value = 3

7.)P-Value Approach

Step 4: What's your conclusion (reject or fail to reject the null) at 5% significance level? Would you conclude that there has been a significant reduction in the average gas price?

a.)Fail to reject the null. There has not been a significant reduction in the average gas price.

b.)Reject the null. There has been a significant reduction in the average gas price.

c.)Reject the null. There has not been a significant reduction in the average gas price.