Question

Home Prices A real estate agency says that the mean home sales price in
Casper, Wyoming, is the same as in Cheyenne, Wyoming. The mean home
sales price for 25 homes in Casper is $294,220. Assume the population
standard deviation is $135,387. The mean home sales price for 25 homes
in Cheyenne is $287,984. Assume the population standard deviation is
$151,996. At a = 0.01, is there enough evidence to reject the agency’s claim?

Answer 1

n = 25

The test hypothesis is

This is a two-sided test because the alternative hypothesis is formulated to detect differences from the hypothesized mean value of 30 on either side.

Now, the value of test static can be found out by following formula:

Since , we reject the null hypothesis in favor of the alternative hypothesis