The average price of homes sold in the U.S. in the past year was $220,000. A ran

Question

The average price of homes sold in the U.S. in the past year was $220,000. A random sample of 81 homes sold this year showed an average price of $210,000. It is known that the standard deviation of the population is $36,000. At 95% confidence test to determine if there has been a significant decrease in the average price homes. a). State the null and alternative hypothesis to be tested b). Compute the test statistic. c). Determine the critical value for the test. d). What do you conclude? e). Compute the p-value

Explanation / Answer

a.Here H0: mu=220000 vs H1: mu<22000

b. Test statistics z=xbar-mu/(sd/sqrt(n))=21000-22000/(36000/9)=-2.5

c. At 95% critical value for z is -1.96

d. We reject the null hypothesis. That means there is significant decrease in the average price homes.

e. P value P(z<-2.5)=0.0062

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