One Sample Hypothesis Paper

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Hypothesis Testing Paper

Jennifer Semore, Brandon Stewart


March 17, 2011

D. Brian Conley

Hypothesis Testing Paper

The real estate data set will provide the information needed to determine a hypothesis based on home values of 105 houses recently sold. It is important to research and analyze the statistics of home prices because of the recent recession and the large number of foreclosures in the last several years to discover the effects on the housing market. Realtors need to have a firm grasp of the needs of their customers and how much they are willing and able to spend on a home. A realtor will also benefit from knowing that the demand for homes near this price point will increase and sell more quickly than homes listed at a higher price. A numerical and verbal hypothesis statement about the home values will give a greater understanding of demand for realtors as well as new home builders. The research process will involve a five-step test to analyze the data systematically.

The first step is to establish the null hypothesis and the alternative hypothesis. The hypothesis to be tested is: because of the recession and re-evaluation of home prices the average demand of the price of a home has dropped below $200,000.00. The null hypothesis H0:µ ˃ $200,000.00 and H1:µ ≤ $200,000.00. This is a testable and mutually exclusive, collectively exhaustive statement. A home value is either equal to or above $200,000.00, or it is below $200,000.00. Only one of these statements can be true, and the goal is to reject the null hypothesis that home value demanded is greater than $200,000.00.

The second step is to establish the test condition criteria. This is a left tailed test indicated by H1, and the level of significance will be 05 or 95%. If the test statistic results lay within the rejection area to the left of the test statistic the result will be to reject the null hypothesis. This level also states that researchers expect to commit a Type 1...