Traditionally, the average price of homes sold in a medium size city in Canada was $220,000. A random sample of 81 homes sold this year showed an average price of $210,000 with a sample standard deviation of $36,000. We wish to determine if there has been a significant decrease in the average price of homes.
- State the null and alternative hypotheses to be tested.
- Compute the test statistic.
- Determine the critical value for this test at the 0.05 level of significance?
- What do you conclude at the 0.05 level of significance?
- Construct a 95% confidence interval for the average price of homes sold this year.