Question: Way to reduce healthcare costs is through the implementation of “sin” taxes (i.e., taxes on vices such as alcohol, cigarettes, adult novelties, etc). The USDA estimates that the average number of cigarettes smoked in the U.S. is ? = 360 (in billions) with a standard deviation, ? = 10 (billion). The CDC reports the average cost for a pack of smokes in the U.S. is $4.80. They also estimate the healthcare costs related to smoking to be $10.47 per pack. In an effort to curb healthcare costs and underwrite his new healthcare initiative, the President has proposed a $10 Federal sales tax on a pack of smokes. The Tobacco Institute initiates a study and finds that the average number of cigarettes sold in the year following the tax has dropped ( = 345 billion).

a. What type of test is this?

b. What are the null and alternative hypotheses?

c. Conduct the appropriate hypothesis test.

d. Do you reject or fail to reject the null hypothesis?

e. What do you conclude? (5 points)