Question

A major building contractor has 10 new floor plans that she would like to start using in the homes she builds. She wants to know whether her homes will sell for a higher price in the city or the suburbs. She builds two homes—one in the city and one in the suburbs—for each of the 10 floor plans. She uses the same real estate agency to sell all 20 homes and then she calculates the difference in selling price (city – suburb) for each of the floor plans. What is the most appropriate test to analyze her data? a. Two Proportion Z Test b. One Sample T Test c. One Proportion Z Test d. Independent Samples T Test e. Paired T Test

Answer 1

Answer: d. Independent Samples T Test

Explanation: Independent Samples T Test is commonly used when you want to compare the means of two independent groups and determine if there is evidence that the the associated means are significantly different.

For this test, the data must have: continuous dependent variable; independent variable is categorical (two or more groups); cases that have values on both variables; the obervations are independent, i.e. the groups don't interfere on each other; random sample of data for the population; normal distribution of the dependent variable for each group; homogeneity of variances and no outliers.

Each groups should have at least 6 subjects and have the same number of individuals in each group.

The hypothesis in this test can be expressed as:

H₀: μ1 = μ2 or μ1 - μ2 = 0

H₁: μ1 ≠ μ2 or μ1 - μ2 ≠ 0