The Average Cost of Tuition and Room and Board at Small

Multiple Choice

The average cost of tuition and room and board at small private liberal arts colleges is reported to be $8,500 per term, but a financial administrator believes that the average cost is higher. A study conducted using 350 small liberal arts colleges showed that the average cost per term is $8,745. The population standard deviation is $1,200. Let α = 0.05. Based on the computed test statistic or p-value, what is our decision about the average cost?

A) Equal to $8,500
B) Greater than $8,500
C) Less than $8,500
D) Not equal to $8,500