Discussion:
Q: Electricity is commonly traded at the California-Oregon border (COB) and Palo Verde (PV) in Arizona. Assume you take a sample of 100 daily electricity market closing prices (in $/megawatthour) from both COB and PV. The following are the summary statistics resulting from your sample:
COB PV
Average Price $200 $300
Standard Dev. $100 $50
Sample Size 100 100
Using the information above conduct a hypothesis test to determine if the average market price at COB is the same as the average market price at PV (Hint: You are looking at the difference in two means). Assume α= .05 and remember to clearly state your null and alternate hypothesis as well as your conclusion about whether or not the average prices are equal