a) Hypotheses: We are testing for any difference between the two groups, so it is a two-tailed test.
- Null Hypothesis ($H_0$): $\mu_Y = \mu_N$. (There is no difference in the population mean incomes).
- Alternative Hypothesis ($H_1$): $\mu_Y \neq \mu_N$. (There is a difference in the population mean incomes).
b) T-statistic Calculation: From the problem description, we have:
- $\bar{X}_Y = 63.4$, $s_Y = 12.2$, $n_Y = 50$
- $\bar{X}_N = 42.8$, $s_N = 18.4$, $n_N = 50$
Now, plug these values into the formula:
$$ t = \frac{\bar{X}_Y - \bar{X}_N}{\sqrt{s_Y^2/n_Y+s_N^2/n_N}} = \frac{63.4 - 42.8}{\sqrt{12.2^2/50+18.4^2/50}} $$
$$ t = \frac{20.6}{\sqrt{148.84/50+338.56/50}} = \frac{20.6}{\sqrt{2.9768+6.7712}} $$
$$ t = \frac{20.6}{\sqrt{9.748}} = \frac{20.6}{3.122} \approx 6.60 $$
c) Decision: We compare our calculated t-statistic ($t \approx 6.60$) to the critical value of $\pm 1.96$.
Since our observed t-statistic of 6.60 is much larger than the critical value of 1.96, it falls in the rejection region for the test. Therefore, we
reject the null hypothesis. We have strong evidence to conclude that there is a statistically significant difference in mean income between those with steady employment and those without.