As the bottom fell out of the oil market in early 1986, educators in Texas worried about how the resulting loss of state revenues (estimated to be about $100 million for each $1 decrease in the price of a barrel of oil) would affect their budgets. The state board of education felt the situation would not be critical as long as they could be reasonably certain that the price would stay above $18 per barrel. They surveyed 13 randomly chosen oil economists and asked them to predict how low the price would go before it bottomed out. The 13 predictions average $21.60, and the sample standard deviation was $4.65. At α = 0.01, is the average prediction significantly higher than $18.00? Should the board conclude that a budget crisis is unlikely? Exp lain.
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