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One Sample Hypothesis Testing - Real Estate

Formulate both a numerical and verbal hypothesis statement regarding your research issue. - 250 words (includes introduction)

Verbal: The average (mean) cost of a three bedroom home is less than or equal to $250,000.

Null Hypothesis: Ho: u < $200,000
Alternate Hypothesis: Ha u > $200,000

We all know the average cost is probably more that $250K but most researchers set up the null hypothesis to be rejected.

Since three are less than 30 in the sample and the population standard deviation is unknown then we will be using the T-test. The alpha or significance level is .05.

Please see attachment with needed information.

Please cite all sources. Thank you in advance for your help.


Solution Preview

Introduction: In this problem, a hypothesis test for one sample mean is performed to test the claim that the average house price is more than $200,000. The test is claimed at the default value of the level of significance as 0.05, which is also the probability of committing a Type I error. The null hypothesis is rejected if the p-value, which is indicative of the probability that the ...

Solution Summary

The solution discusses how sample hypothesis testing for real estate is formulated.