Question

Three years​ ago, the mean price of an existing​ single-family home was $243,758. A real estate broker believes that existing home prices in her neighborhood are lower.

(A) Determine the null and alternative hypotheses.

H0​: ____(p OR μ OR σ) ______(= OR ≠ OR < OR >) $_______

H1​: ____(p OR μ OR σ) ______(= OR ≠ OR < OR >) $_______

(B) Explain what it would mean to make a Type I error.

(C) Explain what it would mean to make a Type II error.

Answer 1

a) As we are trying to test whether the mean price of existing​ single-family home is less than $243,758, therefore the null and the alternate hypothesis here are given as:

b) The type I error is defined as rejection of the true null hypothesis. Here it is defined as the event when we are concluding that the mean is less than 243,758 when the mean is actually equal to 243,758

c) Type II error is the failure of rejecting a false null hypothesis. Here it is defined as the event when we are concluding the mean is not less than 243,758 even though it is less than 243,758