Determine the null and alternative hypotheses, (b), explain what it would mean to make a type I error and (c) explain what it would mean to make a type II error.
Three years ago the mean price of a single family home was $243,705. A real estate broker believes that the mean price has decreased since then.
Which of the following is the hypothesis test to be conducted?
Ho: u = $243,705; Hi: u > $243,705
Ho: u = $243,705; Hi: u < $243,705
Ho: u = $243,705; Hi: u (does not equal) $243,705
(b) Which of the following is a type I error?
The broker fails to reject the hypothesis and the mean price is $243,705, when the true mean price is less than $243,705.
The broker rejects the hypothesis that the mean price is $243,705, when the true mean price is less than $243,705
The broker rejects the hypothesis that the mean price is $243,705, when it is the true mean cost
(c) Which of the following is a type II error?
The broker rejects the hypothesis that the mean price is $243,705, when it is the true mean cost.
The broker fails to reject the hypothesis that the mean price is $243,705, when the true mean price is less than $243,705.
The broker fails to reject the hypothesis that the mean price is $243,705, when it is the true mean cost.