Question

In 2005 the U.S. Census Bureau reported that 68.9% of American families owned their homes. Census data reveal that the ownership rate in one small city is much lower. The city council is debating a plan to offer tax breaks to first-time home buyers in order to encourage people to become homeowners. They decide to adopt the plan on a 2-year trial basis and use the data they collect to make a decision about continuing the tax breaks. Since this plan costs the city tax revenues, they will continue to use it only if there is strong evidence that the rate of home ownership is increasing. a) In words, what will their hypotheses be

Answer 1

H0 : Number of homeowners stays the same

H1: Number of homeowners increases.

Explanation:

The hypothesis is to test if the level of home ownership rises or doesn't.

For this type of experiment,

The null hypothesis is the current level of home ownership.

The alternative hypothesis which is usually the opposite of the null is meant to challenge the claim of the Null. Hence, the null hypothesis will support the claim or hypothesis of the study, which is that the number of homeowners increases, hence, does not remain the same.

Therefore,

H0 : Number of homeowners stays the same

H1: Number of homeowners increases.