The Eagle Ridge Contractors' Association claims the average price of a home in their subdivision is
$125,150, with a standard deviation of $7,350. A sample of 36 homes for sale in this subdivision had an
average selling price of $123,550. Is there evidence that the costs of homes for sale in this subdivision are
actually lower than claimed?
-At $a = 0.05$ , what is the test value?
A) -1.31
B) 1.31
C) -1.52
D) 1.52

Question

Quizplus · Accepted Answer

The test value is -1.31. This is calculated by taking the difference between the sample mean and the claimed mean, and dividing by the standard deviation of the sample. In this case, the difference is $123,550 - $125,150 = -$1,600. The standard deviation of the sample is $7,350. So, the test value is -$1,600 / $7,350 = -1.31.

The Eagle Ridge Contractors' Association Claims the Average Price of a Home