Question

A real estate agent surmises that the median rent for a one-bedroom apartment in a beach community in southern California is at least $1700 per month. The rents for a random sample of 15 one-bedroom apartments are listed below. Find the test statistic x to test the agent's claim.

$2000 $1950 $1400 $1575 $1435

$2450 $1875 $1370 $2090 $2700

$1695 $1700 $1775 $1700 $1480

Answer 1

NULL HYPOTHESIS H0: Medium= $1700

ALTERNATIVE HYPOTHESIS HA: Medium $1700

m > md, then we should expect more than half of the xi − m0 quantities obtained to be positive and fewer than half to be negative.

Number of negative observation x= 6

n= 15

p= 0.5

Therefore, we need to calculate how likely it would be to observe as few as 6 negative signs if the null hypothesis were true. Doing so, we get a P-value of 0.3036.

Since in the question alpha is not given. If we assume alpha=0.05

then P value is not significant. Therefore we do not reject null hypothesis at 0.05 level of significance.