### CFA Practice Question

There are 985 practice questions for this topic.

### CFA Practice Question

A consumer group wants to prove that average hospital costs are equal to or more than \$931 per day. The group randomly samples 60 accounts and finds a sample mean of \$950. The hypothesis test is at an a-level of 5% and assumes a σ of \$50. If the decision is to reject H0: μ < 931, the conclusion should be that ______.

A. the average daily cost of the hospital is more than \$950.
B. there is no evidence that the average daily cost of the hospital is more than \$931.
C. the average daily cost of the hospital is equal to or more than \$931.

Rejecting H0: μ < 931 means that the statement μ < 931 is false. So, the statement μ >= 931 is true. In terms of this problem, this means that the average daily cost of the hospital is equal to or more than \$931.

### User Contributed Comments8

User Comment
Yurik74 Why not A? Ha would be MU more than 931, not equl or more??? Ot not?
bhuman Look at the null hypothesis, its simply states that M < 931. In that case, the alternative hypothesis, which we accept, covers both = and >
jpducros I thought Ho always included the = sign, being either >= or <=
Can someone confirm?
SKIA jpducros -- that is not correct, in a two tailed test Ho does not need to have an equal sign. For example John thinks Jenny is a 5 on a scale of 1 to 10. Therefore the H1 = Jenny is a 5 and the Ho is Jenny is <5 or >5.
sgossett86 I think JPDUCROS is saying that he thinks (and so did I) that H0 includes the equal sign in any hypothesis "de facto". so H0=, or H0>=, or H0<0.................... And yes, i'm still wondering about this after this problem... It raises questions...
EMMADADA I agreed with JPDUCROS. H0 should be included the one with an equal sign. The given answer contradicts what I have learned in any STAT course.
EMMADADA I mean, the answer should be correct. But the explanation is weird.
wpaxtonn21 ^^ yes the null should always include the equal sign.