The housing market has recovered slowly from the economic crisis of 2008. Recent

Question

The housing market has recovered slowly from the economic crisis of 2008. Recently, in one large community, realtors randomly sampled 45 bids from potential buyers to estimate the average loss in home value. The sample showed the average loss was $8181 with a standard deviation of $1683. In 2011, the average home in this region of the country lost $7455 in value. Was the community studied by the realtors unusual? Use a t-test to decide if the average loss observed was significantly different from the regional average with 0.05 as the P-value cutoff level.

Explanation / Answer

Ho : miu = 7455

Ha : miu is different from 7455

t = ( 8181 - 7455) / ( 1683 / srqt 45 )

t = 2.894

for alpha = 0.05 df = 44

critical value is 2.021

since t > critical value we reject Ho

conclusion : the average loss observed was significantly different from the regional average

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