Homes in nearby college town have a mean value of $88,950. It isassumed that hom

Question

Homes in nearby college town have a mean value of $88,950. It isassumed that homes in the vicinity of the college have a highermean value. To test this theory , a random sample of 12 homes is chosen from the college area. Their mean valuation is $92,640,and the standard deviation is $5200. Complete a hypothesis using=0.05. Assume prices are normally distributed (Use p-valueapproach)
a. Symbolize the null and alternative hypotheses.
b. Calculate the value of the test statistic. Round to 2 placesafter the decimal
point.
c. Find the p-value.
d. At the 0.05 level of significance, there _________ enoughevidence to suggest
that homes in the vicinity of the college have a higher value.

Explanation / Answer

H0: Price of house not near college = price of house nearcollege Ha: Price of house not near college is different than that of ahouse near the college z = (92640 - 88950) / (5200 / sqrt(12)) = 2.46 --> p = .9931 Thus, since 1 - .9931 < .025, the null hypothesis is rejectedand we can conclude that the price of houses near the college isdifferent from that of those not near the college.

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