The null hypothesis H0: mean=1 litre
The alternative hypothesis Ha: mean≠1 litre
Significance level ɑ=0.05 (2-tail), so we use ɑ/2 for each tail.
Test statistic T=(0.98-1)/(0.07/√20)=-1.278.
The critical value for a 2-tail t-test with 20-1=19 dof is 2.093. We compare -1.278 with left tail -2.093, and since the test statistic is greater than the critical value we conclude that there is insufficient evidence to reject H0, with a 95% degree of confidence. We cannot reject the farmer’s claim.