Question

Suppose that the average cost per square metre for office rental space in Toronto’s Bay Street business district is $23.58. A large real estate company wants to confirm this figure. The firm conducts a telephone survey of 99 offices in Toronto’s Bay Street business district and asks the office managers how much they pay in rent per square metre. Suppose the sample average is $22.80 per square metre. The population standard deviation is $5.11.
Conduct a hypothesis test using α = 0.05 to determine whether the cost per square metre should be rejected.
question: The value of the test statistic is z = ?; reject or fail to reject hypothesis?

Answer 1

Solution :

= 23.58

= 22.80

= 5.11

n = 99

This is the two tailed test .

The null and alternative hypothesis is

H0 :   = 23.58

Ha : 23.58

Test statistic = z

= ( - ) / / n

= (22.80 - 23.58) /5.11 / 99

= -1.519

P (Z < -1.519) =0.1288

P-value = 0.1288

= 0.05  

0.1288 < 0.05

Fail to reject the null hypothesis .

There is insufficient evidence to suggest that