Question

Your real estate agent has a gut feeling that the average house price in Illinois is $200K. You decide to use the earlier collected data. Your sample size is 4. Sample average is $250K. Sample standard deviation is $60K. Test hypothesis that the average house price in Illinois is $200K vs. alternative that it is not (two-sided). Use alpha 5%. Provide below the value of test statistic up to 3 decimal points

Answer 1

Solution:

Given that,

= 200

= 250

s = 60

n = 4

The test statisc t is,

t = ( -  ) /  (s /n)

t =( 250 - 200) / (60 / 4 )

t = (50 *  4 /60)

t = (50*4 )/ 60

t = 1.667

Test statistic of t value = 1.667

Degrees of freedom = df = n - 1 = 4 - 1 = 3

Using t distribution

P value = 0.0971

P-value >

0.0971>0.05

Do not reject  the null hypothesis .