Exhibit 20.5.An accountant wants to know if the property taxes paid by clients that live in the city are different from those that live in the county.The property taxes paid by five clients from the city (1)and five clients from the county (2)are shown below (in dollars). Refer to Exhibit 20.5.Using the critical value approach,the appropriate conclusion is:
A)Reject the null hypothesis,cannot conclude the median taxes paid in the city differs from the median taxes paid in the county
B)Do not reject the null hypothesis,conclude the median taxes paid in the city differs from the median taxes paid in the county
C)Reject the null hypothesis,conclude the median taxes paid in the city differs from the median taxes paid in the county
D)Do not reject the null hypothesis,cannot conclude the median taxes paid in the city differs from the median taxes paid in the county

Question

Exhibit 20.5.An accountant wants to know if the property taxes paid by clients that live in the city are different from those that live in the county.The property taxes paid by five clients from the city (1)and five clients from the county (2)are shown below (in dollars).  Refer to Exhibit 20.5.Using the critical value approach,the appropriate conclusion is:
A)Reject the null hypothesis,cannot conclude the median taxes paid in the city differs from the median taxes paid in the county 
B)Do not reject the null hypothesis,conclude the median taxes paid in the city differs from the median taxes paid in the county 
C)Reject the null hypothesis,conclude the median taxes paid in the city differs from the median taxes paid in the county 
D)Do not reject the null hypothesis,cannot conclude the median taxes paid in the city differs from the median taxes paid in the county

Quizplus · Accepted Answer

Using the critical value approach with a two-tailed test and a significance level of 0.05, we obtain a critical value of 2.306. We then calculate the median property taxes paid by clients in the city and in the country, which are 1,400 and 1,500, respectively. Since the median property taxes paid in both groups are not significantly different from each other (the absolute difference between the two medians is 100), we fail to reject the null hypothesis. Therefore, we cannot conclude that the median property taxes paid in the city differs from the median property taxes paid in the county. The correct answer is D.