An entrepreneur owns some land that he wishes to develop. He identifies two development options: build condominiums or build apartment buildings. Accordingly, he reviews public records and derives the following summary measures concerning annual profitability based on a random sample of 32 for each such local business venture. For the analysis, he uses a historical (population) standard deviation of $22,800 for condominiums and $19,800 for apartment buildings. Use Table 1.
Sample 1 represents condominiums and Sample 2 represents apartment buildings.
Condominiums = - $243,500 n1-32
Apartment Buildings = $235,200 n2 = 32
a.Set up the hypotheses to test whether the mean profitability differs between condominiums and apartment buildings.
option 1.) H0: μ1 − μ2 = 0; HA: μ1 − μ2 ≠ 0
option 2.) H0: μ1 − μ2 ≥ 0; HA: μ1 − μ2 <>
option 3) H0: μ1 − μ2 ≤ 0; HA: μ1 − μ2 > 0
b.Compute the value of the test statistic and the corresponding p-value. (Round "test statistic" value to 2 decimal places and "p-value" to 3 decimal places.)
(solve) Test statistic ______
(solve) p-value ________
c-1.At the 5% significance level, what is the conclusion to the test?
Choose: (Do not reject or Reject) H0.At either the 5% significance levels, we (Can or Cannot) conclude the mean profitability differs between condominiums and apartment buildings.
c-2.At the 10% significance level, what is the conclusion to the test?
Choose: (Do not reject or Reject) H0.At either the 10% significance levels, (Can or Cannot) conclude the mean profitability differs between condominiums and apartment buildings.
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