Which statistical test is used to compare a sample mean to a known value when the population standard deviation is unknown?

Prepare for the PHFO Quantitative Analysis For Business Exam. Study with flashcards, multiple choice questions, hints, and explanations to ensure confidence and success in your exam!

Multiple Choice

Which statistical test is used to compare a sample mean to a known value when the population standard deviation is unknown?

Explanation:
When you’re comparing a sample mean to a known value and you don’t know the population standard deviation, you use a one-sample t-test. The t-test accounts for the extra uncertainty from estimating the spread with the sample standard deviation. You compute the t statistic as (sample mean − known value) divided by (sample standard deviation divided by the square root of the sample size). This statistic follows a t distribution with n−1 degrees of freedom, so you can assess significance using the t distribution or a p-value. If the population standard deviation were known, you’d use a z-test instead. ANOVA is for comparing means across three or more groups, and chi-square is for categorical data, not a single mean comparison.

When you’re comparing a sample mean to a known value and you don’t know the population standard deviation, you use a one-sample t-test. The t-test accounts for the extra uncertainty from estimating the spread with the sample standard deviation. You compute the t statistic as (sample mean − known value) divided by (sample standard deviation divided by the square root of the sample size). This statistic follows a t distribution with n−1 degrees of freedom, so you can assess significance using the t distribution or a p-value. If the population standard deviation were known, you’d use a z-test instead. ANOVA is for comparing means across three or more groups, and chi-square is for categorical data, not a single mean comparison.

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