Your real estate agent recently stated that houses in the suburb typically had an average price around 1200 ($000), but have recently changed. Test his claim at the 5% level of significance. Show all...

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Answered Same DayOct 05, 2020ECON1248

Answer To: Your real estate agent recently stated that houses in the suburb typically had an average price...

Pooja answered on Oct 06 2020
140 Votes
1)
Null hypothesis, ho: an average price is 1200 ($000). V/s Alternative Hypothesis, h1: an average price i
s not 1200 ($000),
Mean= 321,858
sd= sqrt(var) 49578.87486
u= 1,200,000
n= 50.00
alpha= 5%
Critical value, z(a/2)
z(0.05/2)
1.960
Test statistic, z = (mean-u)/(sd/sqrt(n))
= (321858-1200000)/(49578.8748627181/sqrt(50))
-125.2429
P-value
2*(1-P(z<|z|)
2*(1-P(znormsdist(abs(-125.2429))
0.0000
With z=125.24, p<5%, i reject null hypothesis and conclude that an average price is not 1200 ($000), hence i can say that average prices have recently changed. Darlington, R. B., & Hayes, A. F. (2016). 
2)
a) Intercept, bo = 317992.4. The initial price is $317992.4 when size is zero.
Slope, b1 = 1.48. As the value of size increases by 1 unit. There is a 1.48$ increase in price.
b) Regression output:
    SUMMARY OUTPUT
     
     
    Regression Statistics
    Multiple R
    0.102367
    R Square
    0.010479
    Adjusted R Square
    -0.01014
    Standard Error
    49829.51
    Observations
    50
 
    ANOVA
     
     
     
     
     
     
    df
    SS
    MS
    F
    Significance...
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