Question

A real estate broker took a random sample of 12 households from a prestigious city of Boston and found that the estimated average market value was $ 780,000, a standard deviation of $ 49,000. On average, the houses in the area have a value of $ 825.00. Use a level of significance of 0.05 to test your hypothesis. Find the value of p and interpret its result. (Every step had to be manual)

Answer 1

Here we are given:

Mew(a)= $825 , xbar =$780,000, s=49,000,n=12

Null hypothesis _{,H0: a=825}

_{Alternative hypothesis :H1: a not equals to 825}

_{Test statistic under H0 : t = ✓11(780000-825)/49,000=52.739}

_{P value = t(.05,11)=1.796(From t - table)}

_{Interpretation : since the calculated value is much greater than the tabulated}

_{value,it is highly significant.Hence we reject null hypothesis at 5% level of significance.}