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    Sample observations and test hypothesis

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    Exercise 3.

    Macaray Homes is developing two parcels near Globe Arizona. In order to test different advertising approaches, they use different media to reach potential buyers. The mean annual family income for 75 people making inquiries at the first development is $150,000, with a standard deviation of $40,000. A corresponding sample of 120 people at the second development had a mean of $180,000, with a standard deviation of $30,000. At the .05 significance level, can Macaray conclude that the population means are different? Note that you should show all 5 steps in the test of hypothesis.

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    Solution Preview

    Step 1: The null hypothesis (H0) and the alternative hypothesis (H1)

    H0: mu1=mu2
    H1: mu1 is NOT equal to mu2.

    Step 2: Select a significance level alpha.

    We choose ...

    Solution Summary

    The solution examines sample observations and test hypothesis. The significance level is concluded.