23A real estate agent in the coastal area of Georgia wants to compare the variat

Question

23A real estate agent in the coastal area of Georgia wants to compare the variation in the selling price of homes on the oceanfront with those one to three blocks from the ocean. A sample of 21 oceanfront homes sold within the last year revealed the standard deviation of the selling prices was $45,600. A sample of 18 homes, also sold within the last year, that were one to three blocks from the ocean revealed that the standard deviation was $21,330. At the .01 significance level, can we conclude that there is more variation in the selling prices of the oceanfront homes?

Explanation / Answer

Here is what I worked out - n1 = 21, s1 = 45600, n2 = 18, s2 = 21330 H0: s1 = s2 vs Ha: s1 > s2 Upper-tailed z- test at a = 0.01 Critical z- score = 2.3263 Decision Rule: Reject H0 if the test z- score > 2.3263 SE = sqrt [(s1^2 /2n1) + (s2^2 /2n2)] = sqrt [(45600^2 /2 * 21) + (21330^2 /2 * 18)] = 7883.31 z = (s1 - s2)/SE = (45600 - 21330)/7883.31 = 3.0786 Since 3.0786 > 2.3263, we reject H0 and accept Ha Conclusion: It appears that there is more variation in the selling prices of the ocean-fron homes.

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.