Question

Techside Real Estate, Inc. is a research firm that tracks the cost of apartment rentals in Southwest Virginia. In mid-2002, the regional average apartment rental rate was $895 per month. Assume that, based on the historical quarterly surveys, it is reasonable to assume that the population standard deviation is $225. In a current study of apartment rental rates, a sample of 180 apartments in the region provided the apartment rental rates.

a. Do the sample data enable Techside Real Estate, Inc. to conclude that the population mean apartment rental rate now exceeds the level reported in 2002? The sample mean is $915 and the sample standard deviation is $227.50. Make your decision based on α=0.10.
b. What is the P-value?

Answer 1

1) we will fail to reject the null hypothesis and conclude that the population mean apartment rental rate does not exceed the level reported in 2002

2) P - value = 0.116435

Explanation:

We are given;

Population mean; μ = $895

Sample mean; x' = $915

Population standard deviation; σ = $225

Sample standard deviation; s = $227.50

Sample size; n = 180

Let's state the hypothesis;

Null hypothesis;H0: μ ≤ $895

Alternative hypothesis;Ha: μ > $895

Now, the z-score formula is;

z = (x' - μ)/(σ/√n)

Thus, we are making use of the population standard deviation

z = (915 - 895)/(225/√180)

z = 20/16.7705

z = 1.193

From online p-value from z-score calculator attached, with α = 0.10, one tail, we have;

The P-Value is 0.116435

This is more than the significance level of 0.1, thus we will fail to reject the null hypothesis and conclude that the population mean apartment rental rate does not exceed the level reported in 2002