Question

In real estate, it is common knowledge that where the house is located is extremely important (many people summarize this by saying the three most important factors in home sales are location, location, and location). Many characteristics of a house are tied to its location, one of which is age. Some neighborhoods are considered "old" while others are considered "new," with new homes generally selling at a higher price.

One way to compare "old" and "new" neighborhoods is to examine the difference in the mean age of houses in those neighborhoods. Ben, a real estate agent, is interested in determining whether the mean age of houses located in the Peaceful Pines neighborhood (Group 1) differs from the mean age of houses in the Whispering Willows neighborhood (Group 2). To examine this question, he will perform a hypothesis test using a sample of six houses from each neighborhood. The data (representing the ages in years of each home) are as shown below:

Peaceful Pines

21, 43, 55, 51, 53, 52

Whispering Willows

45, 36, 42, 53, 47, 46

Calculate the test statistic for the hypothesis test that Ben would be interested in conducting, to two decimal places. Use Case 2 (assuming unequal population standard deviations). Inputting the data into Excel will make the calculations much easier.

Answer 1

The conclusion is that p-value in this context is greater than 0.05 which is 0.8663, so the null hypothesis is not rejected at 5% level of significance. There is insufficient evidence to indicate that the mean age of houses located in the Peaceful Pines neighbourhood differs from the mean age of houses in the Whispering Willows neighbourhood. The result is not statistically significant.