According to an estimate, the average price of homes in Martha’s Vineyard, Massachusetts, was $650,000 in 2011 (USA TODAY, August 11, 2011). A recent random sample of 70 homes from Martha’s Vineyard showed that their average price is $674,000 with a standard deviation of $94,500.

Using a 2% significance level, can you conclude that the current average price of homes in Martha’s Vineyard is different from $650,000? Use both the p-value and critical-value approaches.

Question

According to an estimate, the average price of homes in Martha’s Vineyard, Massachusetts, was $650,000 in 2011 (USA TODAY, August 11, 2011). A recent random sample of 70 homes from Martha’s Vineyard showed that their average price is $674,000 with a standard deviation of $94,500.

Using a 2% significance level, can you conclude that the current average price of homes in Martha’s Vineyard is different from $650,000? Use both the p-value and critical-value approaches.

anonymous · Answer

first you need to know how to find stander deviation

shamil98 · Answer

n = 70, x/bar = 674,000 s = 94,500

H_0: mu = 650,00
H_1: mu DNE 650,000

t = 2.125 , df = 69

not sure how to continue

shamil98 · Answer

@kropot72

kropot72 · Answer

Have you calculated the test statistic?

shamil98 · Answer

the what?

shamil98 · Answer

I'm not sure what to do since i'm not given an alpha value to test against, what do i do with the significance level?

kropot72 · Answer

The level alpha is also commonly described as the 'significance level'.

kropot72 · Answer

In this case:
$$\large \alpha=0.02$$

shamil98 · Answer

Oh! okay I get it.
so 2% significance level means that alpha = 0.02
and since its a DNE test I use the two-tail methods

kropot72 · Answer

Correct, a two-tail method is required.

shamil98 · Answer

thanks man, i got it from here!

kropot72 · Answer

Cool! You're welcome :)