Question

Property assessments. The data that follow show assessed value for property tax purposes (Y1 in thousand dollars) and sales price (Y2, in thousand dollars) for a sample of 15 parcels of land for industrial development sold recently in "arm's length" transactions in a tax district. Assume that bivariate normal model (2.74) is appropriate here.

i: Yi1 Yi2

1: 13.9 28.6

2: 16.0 34.7

3: 10.3 21.0

4: 11.8 25.5

5: 16.7 36.8

6:    12.5 24.0

7: 10.0 19.1

8:     11.4 22.5

9:    13.9 28.3

10: 12.2 25.0

11:   15.4 31.1

12: 14.8 29.6

13:   14.9 35.1

14: 12.9 30.0

15: 15.8 36.2

b. Calculate r12. What parameter is estimated by r12? What is the interpretation of this parameter?

c. Test whether or not Y1 and Y2 are statistically independent in the population, using test statistic (2.87) and level of significance .01. State the alternatives, decision rule, and conclusion.

d. To test P12 = .6 versus P12 ≠.6, would it be appropriate to use test statistic (2.87)?

Answer 1