An entrepreneur is considering the purchase of a coin-operated laundry. The current owner claims that over the past 5 years, the average daily revenue was $675 with a standard deviation of $75. A sample of 30 days reveals a daily average revenue of $625.

If you were to test the null hypothesis that the daily average revenue was $675, which test would you use?

a. Z-test of a population mean

b. Z-test of a population proportion

c. t-test of population mean

d. t-test of a population proportion

We would use Z-test of a population mean.

Step-by-step explanation:

We are given that an entrepreneur is considering the purchase of a coin-operated laundry. The current owner claims that over the past 5 years, the average daily revenue was $675 with a standard deviation of $75. A sample of 30 days reveals a daily average revenue of $625.

And we have to test the hypothesis that the daily average revenue was $675.

Firstly, as we know that testing is always done on the population parameter.

So, let = daily average revenue over the pat 5 years

So, Null Hypothesis, : = $675

Alternate Hypothesis, : $675

Here, null hypothesis states that the owner's claim of average daily revenue was $675 over the past 5 years is correct.

And alternate hypothesis states that the owner's claim of average daily revenue was $675 over the past 5 years is not correct.

The test statistics that will be used here is Z-test of a population mean because here we have knowledge of population standard deviation of $75.

   Test statistics =  ~ N(0,1)

where, = sample average revenue = $625

            = population standard deviation = $75

             n = sample of days = 30

Therefore, to test the null hypothesis that the daily average revenue was $675, we should use Z-test of a population mean.

the answer to the expression is 83