MAT 240 Module Five Assignment
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Hypothesis Testing for Regional Real Estate Company
1
Hypothesis Testing for Regional Real Estate Company
Southern New Hampshire University
Hypothesis Testing for Regional Real Estate Company
2
Introduction
The purpose of this analysis is to determine if the newly designed advertisement that claims the average cost per square foot in the Pacific Region is $280, and the salesman claims that the price is less than $280 per square foot. The facts need to be checked before this advertisement is approved. I generated a random selection of 750 listings within the Pacific Region by using the =RAND() function in Excel. This generated a random number next to each listing. I thin had Excel sort the listings in random from lowest to highest. Finally, I chose the first 750 home listings in the new random list and deleted all the other listings. Hypothesis Test Setup
Using the excel function =AVERAGE I found the mean cost per square foot is $264. The null hypothesis is $280 per square foot. The alternate hypothesis is less than $20. I will be using a left
tailed test. Data Analysis Preparations
Sample Mean:
264
Target:
280
Standard Error:
5.93477165
Test Statistic
-2.69597567
Degrees of Freedom:
749
Left Tailed Test
H0: u=280
H1: u˂280
P-value
0.00358791
Hypothesis Testing for Regional Real Estate Company
3
The histogram of the sample shows that it is skewed to the left with a downward progression with the listing price of the home. The test significance level is 0.05. The sample mean is 264. The Standard error is 5.934. The p-value is 0.00358. Calculations
I calculated the Sample mean with the excel function =AVERAGE(E:E)
I calculated the standard error using the Excel function =Stdv.s(E:E)/sqrt750
I calculated the test statistic using =sample_mean-280)/std error
The test statistic= -2.696
I used a left tailed test and the P-value =0.00359
The P-value is less than the test significance of 0.05 so the null hypothesis is rejected.
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Hypothesis Testing for Regional Real Estate Company
4
Test Decision
I used a left tailed test and the P-value =0.00359
The P-value is less than the test significance of 0.05 so the null hypothesis is rejected.
Conclusion
The purpose of this analysis was to determine if in the Pacific region the average home cost per square foot was $280 or less than $280. My calculations proved that the newly designed advertisement stating the average cost per square foot was $280 was incorrect. I would reject the advertisement.
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