The average gasoline price of one of the major oil companies in Europe has been $1.25 per liter. Recently, the company has undertaken several efficiency measures in order to reduce prices. Management is interested in determining whether their efficiency measures have actually reduced prices. A random sample of 49 of their gas stations is selected and the average price is determined to be $1.20 per liter. Furthermore, assume that the standard deviation of the population (σ) is $0.14.
a. Compute the standard error.
b. Compute the test statistic.
c. What is the p-value?
d. Develop appropriate hypotheses such as the rejection of the null will support the contention that management efficiency measures had reduce gas prices in Europe.
e. At what is your conclusion? Use the critical value approach. 05.0=α
f. Repeat the preceding hypothesis test using the p-value approach.