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An entrepreneur owns some land that he wishes to develop He identifies two development options: build condominiums or build apartment buildings

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.

Apr 23 2020 View more View Less

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