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5- Laura is thinking about buying a house which is listed for $520,000. The realtor tells her that the house is listed below the average
5- Laura is thinking about buying a house which is listed for $520,000. The realtor tells her that the house is listed below the average price of similar houses in the neighbourhood. So, she is thinking about buying the house and selling it quickly for a profit. Laura is facing this hypothesis testing problem (Ho: # = $520,000 (Don't buy) (H : p > $520,000 (Buy) where u is the true average of the prices of similar houses in that neighbourhood. (A) Describe Type I error in the context of this question and explain its consequences to Laura. (B) Describe Type II error in the context of this question and explain its consequences to Laura. (C) The realtor shows Laura the sale prices of 32 similar houses in the neighbourhood which on average were sold for $562,000 with standard deviation of $63,000. Based on this data, at a = 0.05, should Laura buy the house or not? Explain
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