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Civics Hypothesis Testing

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1) The nationwide mean price for a 3-year old Honda civic is $8,500 with a known standard deviation of $600. You check the newspaper and find nine 3-year old Civics in San Francisco selling for an average price of $9,000. You wonder whether the cost of Civics in San Francisco is higher than the rest of the nation.

a) State your question about the price of Civics in terms of a null and an alternative Hypothesis. What are you assuming about the distribution of Civic prices?
b) Will the alternative hypothesis be one-sided or two-sided? Defend your answer.
c) Test your null hypothesis. Do you accept or reject it and at what p-value? Construct a 95% confidence interval for Civic prices in San Francisco.
d) Redo your analysis, but this time assume that the sample size is 10 with a sample average of $9,000 and a sample standard deviation of $600. Assume that you don't know the value of the nationwide standard deviation.

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Solution Summary

This solution is provided in a 2 page .doc file. It lists the hypotheses of the test, as well as calculates the Z-statistic and confidence interval.

Solution provided by:
Changping Wang, MA
Education
  • BSc , Wuhan Univ. China
  • MA, Shandong Univ.
Recent Feedback
  • "Your solution, looks excellent. I recognize things from previous chapters. I have seen the standard deviation formula you used to get 5.154. I do understand the Central Limit Theorem needs the sample size (n) to be greater than 30, we have 100. I do understand the sample mean(s) of the population will follow a normal distribution, and that CLT states the sample mean of population is the population (mean), we have 143.74. But when and WHY do we use the standard deviation formula where you got 5.154. WHEN & Why use standard deviation of the sample mean. I don't understand, why don't we simply use the "100" I understand that standard deviation is the square root of variance. I do understand that the variance is the square of the differences of each sample data value minus the mean. But somehow, why not use 100, why use standard deviation of sample mean? Please help explain."
  • "excellent work"
  • "Thank you so much for all of your help!!! I will be posting another assignment. Please let me know (once posted), if the credits I'm offering is enough or you ! Thanks again!"
  • "Thank you"
  • "Thank you very much for your valuable time and assistance!"
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