6. Suppose that you are responsible for making arrangements for a business conve

Question

6. Suppose that you are responsible for making arrangements for a business convention. Be- cause of budget cuts due to the recent recession, you have been charged with choosing a city for the convention that has the least expensive hotel rooms. You have narrowed your choices to Atlanta and Houston. The WEBfile named Hotel contains samples of prices for rooms in Atlanta and Houston that are consistent with the results reported by Smith Travel Research (SmartMoney, March 2009). Because considerable historical data on the prices of rooms in both cities are available, the population standard deviations for the prices can be assumed to be $20 in Atlanta and S25 in Houston. Based on the sample data, can you conclude that the mean price of a hotel room in Atlanta is lower than one in Houston?

Explanation / Answer

Varianceis the average of the squared distances from each point to the mean.

A small variance indicates that the data points tend to be very close to the mean, and to each other. A high variance indicates that the data points are very spread out from the mean, and from one another.

Hence the same for standard deviation.

So, we cannot conclude that the mean price of a fotel room in Atlanta is lower than one in Houston although standard deviation of the price of rooms in atlanta is lower than that of Houston.

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