Question

Suppose that in past years the average price per square foot for warehouses in the United States has been $31.28. A national real estate investor wants to determine whether that figure has changed now. The investor hires a researcher who randomly samples 50 warehouses that are for sale across the United States and finds that the mean price per square foot is $30.64, with a standard deviation of $1.22. Assume that prices of warehouse footage are normally distributed in population. If the researcher uses a 5% level of significance, what statistical conclusion can be reached?

Answer 1

Solution :

The null and alternative hypothesis is ,

H0 :   = 31.28

Ha : 31.28

Test statistic (t) =

= ( - ) / s / n

= (30.64 - 31.28) / 1.22 / 50

Test statistic = -3.71

P-value = 0.0005

= 0.05

P-value <

Reject the null hypothesis .

There is sufficient evidence to support the claim.