Question

A family moved to Orlando, FL and bought a home. They paid $309,450 for their house. In their neighborhood the mean price of a home is $310,500 with a standard deviation of $2340. Calculate the z-score for the price of their home and indicate if the price they paid for their home usual or unusual?

Answer 1

z-score = -0.448

Since the z-score is in the range of -1.96 and 1.96 the price paid for the home is usual.

Step-by-step explanation:

Data provided:

Price Paid = $309,450

Mean price = $310,500

Standard deviation = $2,340

Now,

The z-score is calculated as:

z-score =
`\frac{\textup{X - Mean}}{\textup{Standard Deviation}}`

on substituting the respective values,

z-score =
`\frac{\textup{309,450 - 310,500}}{\textup{2340}}`

or

z-score = -0.448

Since the z-score is in the range of -1.96 and 1.96 the price paid for the home is usual.