The director of Heating and Oil at Mitchell Brothers Company is concerned about the high cost of home heating oil being offered to their customers for the upcoming Fall season in Boston, MA. The company has no possibility of modifying the oil price under the current economic conditions. He believes that the company should offer a low cost maintenance contract to foster good will. The director decides to survey a sample of the surrounding towns to see what people are paying for similar home maintenance contracts. The telephone sample of 20 homes indicated that the customers are paying X (bar) = $165.4 and s = $22.20 for a yearly contract.
a. Using the 0.05 level of significance, is there evidence that the population mean is above $170?
b. What is your answer in (a) if s = $50 and the 0.10 level of significance is used?
c. What is your answer in (a) if X (bar) = $179.00 and s = $20.20?