(a) Determine the null and alternative hypotheses, (b) explain what it would mea
ID: 3317902 • Letter: #
Question
(a) Determine the null and alternative 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
$243,797.
A real estate broker believes that the mean price has
increasedincreased
since then.
(a) Which of the following is the hypothesis test to be conducted?
A.
Upper H 0H0:
=$243,797;
Upper H 1H1:
$243,797
B.
Upper H 0H0:
=$243,797;
Upper H 1H1:
<$243,797
C.
Upper H 0H0:
=$243,797;
Upper H 1H1:
>$243,797
(b) Which of the following is a type I error?
A.
The broker fails to reject the hypothesis that the mean price is
$243,797,
when the true mean price is greater
than
$243,797.
B.
The broker rejects the hypothesis that the mean price is
$243,797,
when it is the true mean cost.
C.
The broker rejects the hypothesis that the mean price is
$243,797,
when the true mean price is
greater
than
$243,797.
(c) Which of the following is a type II error?
A.
The broker rejects the hypothesis that the mean price is
$243,797,
when it is the true mean cost.
B.
The broker fails to reject the hypothesis that the mean price is
$243,797,
when it is the true mean cost.
C.
The broker fails to reject the hypothesis that the mean price is
$243,797,
when the true mean price is
greatergreater
than .243,797.
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Explanation / Answer
Three years ago, the mean price of a single-family home was $243,797.
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?
Answer is C
Ho =$243,797
vs H1: >$243,797
(b) Which of the following is a type I error?
Type 1 error is probability of rejecting null hypothesis when it is true.
Answer is
B. The broker rejects the hypothesis that the mean price is $243,797, when it is the true mean cost.
(c) Which of the following is a type II error?
Type 2 error is accepting Ho when it is false.
Answer is C. The broker fails to reject the hypothesis that the mean price is $243,797, when the true mean price is greatergreaterthan $243,797.
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