A7 - Weihan Ni A20252394 MBA 507 Decision Making Assignment 7 13.12 a H0:NE SW = 0 HA NE SW 0 b Assumptions and conditions are met Independent

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Weihan Ni A20252394 MBA 507 Decision Making Assignment 7 13.12 a) H 0 NE - μ SW = 0; H A : μ NE - μ SW ≠ 0 b) Assumptions and conditions are met. Independent group assumption: the cities are independent. Randomization condition: it is reasonable to assume that the cities were selected at random in the sample and are representative of other cities in the region. Nearly Normal condition: the histogram for southeast homes is slightly skewed to the right, but not seriously enough to stop the test. No outliers.

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c) The question can be answered by comparing the observed t-value with the critical t- value or by calculating the P-value. The observed t-value is: t= t n-1 = ( SE - NE )/SE( SE - NE ) where ( SE - NE ) = 17.0658-2.1245 = 14.9413. SE( SE - NE )=(s 1 2 /n 1 +s 2 2 /n 2 )^0.5=(3.84 2 /20+5.30 2 /19)^0.5=1.4885 T=14.9413/1.4885=10.04 The observed df=553.6. The 2-side critical t-value for a df=32.71 is 2.037. The observed t-value is greater than the critical value, therefore, the result is significant and we reject the null hypothesis. We conclude that there is sufficient evidence of a difference in the means. The 2-side P-value is obtained to be 0.00000000002. The value is less than 5% and rejects the null hypothesis. d) The observed difference is too large to have occurred by chance.
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This note was uploaded on 11/07/2011 for the course ECON 101 taught by Professor Johnson during the Spring '11 term at Sciences Po.

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A7 - Weihan Ni A20252394 MBA 507 Decision Making Assignment 7 13.12 a H0:NE SW = 0 HA NE SW 0 b Assumptions and conditions are met Independent

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