Question

The average home in the U.S. is expected to cost $240,000. A random sample of 65 homes sold this month showed an average price of $232,000. Assume that you have access to this data. We are interested in determining if the cost of the average home has decreased this month. If the test statistic is -1.79, what is the p-value

Answer 1

Solution :

It is given that we have a null and an alternative hypothesis. The hypothesis are :

$H_0: \mu = 240,000$

$H_a : \mu < 240,000$

We have to find if the cost of average home has decreased or not in this month.

So it is given that the test statics is -1.79, so the p value associated with the test statics is less than ( α ) 0.01

Therefore, we can conclude that the cost of the average house is less than $ 240,000.