This past year, home prices in the Midwest increased by an average of 6.6%. A realtor collects data on 36 home sales in the West. He finds an average increase in home prices of 7.5%, with a standard deviation of 2%. Can he conclude that the average increase in home prices in the West is greater than the increase in the Midwest? Use a 5% significance level for the analysis.

Respuesta :

Testing the hypothesis, we can conclude that the increase in the West is greater than in the Midwest, as the p-value of the test is 0.0053 < 0.05.

-------------------

  • The comparison is with the Midwest, in which the increase was of 6.6%. Thus, at the null hypothesis, we test if the increase in the West was also of 6.6%, that is:

[tex]H_0: \mu = 6.6[/tex]

  • We want to test if the increase is greater, thus, at the alternative hypothesis, we test if the mean is greater than 6.6%, that is:

[tex]H_1: \mu > 6.6[/tex]

-------------------

  • We have the standard deviation for the sample, which means that the t-distribution is used.

The test statistic is:

[tex]t = \frac{X - \mu}{\frac{s}{\sqrt{n}}}[/tex]

In which

  • X is the sample mean.
  • [tex]\mu[/tex] is the value tested at the null hypothesis.
  • s is the standard deviation of the sample.
  • n is the size of the sample.

-------------------

  • 6.6 is tested at the null hypothesis, thus [tex]\mu = 6.6[/tex]
  • Sample of 36, thus [tex]n = 36[/tex]
  • Sample standard deviation of 2%, thus [tex]s = 2[/tex]
  • Sample mean of 7.5%, thus [tex]X = 7.5[/tex]

The value of the test statistic is:

[tex]t = \frac{X - \mu}{\frac{s}{\sqrt{n}}}[/tex]

[tex]t = \frac{7.5 - 6.6}{\frac{2}{\sqrt{36}}}[/tex]

[tex]t = 2.7[/tex]

-------------------

  • We are testing if the mean is more than a value, thus, the p-value of the test is a right-tailed test, with 36 - 1 = 35 degrees of freedom and t = 2.7.
  • Using a t-distribution calculator, this p-value is of 0.0053.

We can conclude that the increase in the West is greater than in the Midwest, as the p-value of the test is 0.0053 < 0.05.

A similar problem is given at https://brainly.com/question/24146681