Determine whether the hypotheses, (b) explain what it would mean to make a type

ID: 3129974 • Letter: D

Question

Determine whether the hypotheses, (b) explain what it would mean to make a type I error, and (c) explain what it would mean to make a type II error.

Three years ago, the mean price of a single-family home was $243,707. A real estate broker believes that the mean price has increased since then.

(a) Which of the following is the hypothesis test to be conducted?

___ A. H0: =$243,707, H1: $243,707

___ B. H0: =$243,707, H1: <$243,707

___ C. H0: =$243,707, H1: >$243,707

(b) Which of the following is a type I error?

___ A. The broker rejects the hypothesis that the mean price is $243,707, when it is the true mean cost.

___ B. The broker rejects the hypothesis that the mean price is $243,707, when the true mean price is greater than $243,707.

___ C. The broker fails to reject the hypothesis that the mean price is $243,707, when the true mean price is greater than $243,707.

___ A. The broker rejects the hypothesis that the mean price is $243,707, when it is the true mean cost.

___ B. The broker fails to reject the hypothesis that the mean price is $243,707, when the true mean price is greater than $243,707.

___ C. The broker fails to reject the hypothesis that the mean price is $243,707, when it is the true mean cost.

A real estate broker believes that the mean price has increased since then.

Hence, we use > for H1,

OPTION C: H0: =$243,707, H1: >$243,707 [ANSWER]

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As a type I error is incorrectly rejecting a true null hypothesis, then

OPTION A: A. The broker rejects the hypothesis that the mean price is $243,707, when it is the true mean cost. [ANSWER, A]

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As a type II error is incorrectly failing to reject a false null hypothesis, then

OPTION B. The broker fails to reject the hypothesis that the mean price is $243,707, when the true mean price is greater than $243,707. [ANSWER, B]

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