Base on the given data given, change the variable sale price into two categories: above the mean price or not; and change the living area into two categories: above the median living area or not ( your two groups should have close number of houses in each group). Using the resulting variables, will you conclude that larger house corresponding to higher price? Note: Need computer output, Ho and Ha, P and decision. If p is small, you need to explain what type of dependency (association) we have using an appropriate pair of percentages.

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sellprice listprice LIVINGAREA ROOMS BEDRMS BATHRMS AGE ACRES TAXES
710.00 800 28 10 5 3 60 0.28 3167
875.00 900 18 8 4 1 12 0.43 4033
645.00 660 13 6 3 1 41 0.33 1471
690.00 700 17 7 3 1 22 0.46 3204
1160.00 1200 25 8 4 3 5 2.05 3613
675.00 700 18 7 4 3 9 0.57 3028
750.00 800 20 8 4 3 18 4.00 3131
1035.00 1125 22 8 4 2 16 2.22 5158
1355.00 1425 30 10 5 2 30 0.53 5702
445.00 450 10 5 3 1 43 0.30 2054
765.00 785 22 8 3 3 18 0.38 4127
432.50 450 16 7 3 1 50 0.65 1445
1170.00 1190 25 8 4 2 2 1.61 2087
527.50 580 20 8 4 1 13 0.22 2818
875.00 900 22 8 4 2 15 2.06 3917
825.00 850 17 8 4 2 33 0.46 2220
830.00 850 23 9 4 2 37 0.27 3498
680.00 700 19 7 3 1 22 0.63 3607
740.00 800 17 7 3 2 13 0.36 3648
755.00 765 19 8 4 2 24 0.34 3561
900.00 950 24 9 4 2 10 1.55 4681
1465.00 1525 26 8 4 3 6 0.46 7088
835.00 850 20 9 4 2 46 0.46 3482
950.00 965 22 9 5 2 37 0.48 3920
920.00 950 21 9 5 2 27 1.30 4162
785.00 825 20 8 4 2 7 0.30 3785
550.00 575 16 8 4 1 26 0.29 3103
675.00 725 18 7 4 1 35 0.43 3363
2835.00 3125 64 11 4 3 4 0.85 12192
900.00 925 20 8 4 2 11 1.00 3831
915.00 940 17 7 3 2 16 3.00 3564
925.00 965 20 9 3 2 56 6.49 3765
760.00 775 17 8 4 1 33 0.70 3361
740.00 765 13 6 3 2 22 0.39 3950
760.00 795 15 7 3 1 25 0.59 3055
730.00 750 16 7 3 1 31 0.36 2950
850.00 950 24 10 3 2 33 0.57 3346
635.00 650 20 8 4 1 65 0.40 3334
1325.00 1350 36 10 6 3 33 1.20 5853
785.00 815 18 8 4 2 12 1.13 3982
640.00 675 17 9 4 1 25 0.52 3374
550.00 600 15 8 4 2 11 0.59 3119
615.00 650 18 8 4 2 43 0.39 3268
1060.00 1150 39 12 5 3 202 4.29 3648
725.00 725 18 8 4 2 44 0.22 2783
645.00 675 10 6 3 1 15 1.00 2438
715.00 725 21 7 4 2 10 1.20 3529
1235.00 1260 29 9 4 2 4 1.25 4626
555.00 600 15 8 3 1 97 1.11 3205
665.00 725 26 7 3 1 42 0.36 3059

Base on the given data given, change the variable sale price into two categories: above the mean price or not; and change the living area into two categories: above the median living area or not ( your two groups should have close number of houses in each group). Using the resulting variables, will you conclude that larger house corresponding to higher price?

Note: Need computer output, Ho and Ha, P and decision. If p is small, you need to explain what type of dependency (association) we have using an appropriate pair of percentages.

Expert Solution
Step 1
Here, we're going to perform a chi square test of independence. A statistical hypothesis test called the chi-square test of independence is used to examine whether or not two nominal or categorical variables are likely to be connected.
Null Hypothesis assumes that there is no connection between the two variables and Alternative Hypothesis assumes there is an association between two variable.
 
The null and the alternative hypotheses are given by
H0: Sale price and living area are independent
against
H1: sale price and living are are associated
 

The test statistic is given by

*n Xobserved (ad – bc) (a + b)(c+d)(a + c)(b + d)

i.e. Xobserved = (22 * 15) - (11 * 2))2 * 50 24 * 26 * 17 * 33 = 4743200 350064 = 13.54952237

 

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Note: Need computer output, Ho and Ha, P and decision. If p is small, you need to explain what type of dependency (association) we have using an appropriate pair of percentages.


Can we do it in SPSS

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