The crisis in the real estate market caused the listing prices of homes in certain areas to fall from previous years. A real estate office would like to sample

54

new listings randomly to test the hypothesis that the current listing price average is less than

$243,000,

the average in the previous year. Assume the standard deviation for the price of homes in this market is

$45,000.

A Type I error can occur if the average listing price is

above or equal to $243,000 and the null hypothesis is rejected. A Type II error can occur if the average listing price is

below $243,000 and the null hypothesis is not rejected.

A. Using a=0.10, calculate the probability of a Type II error occurring if the actual average listing is $230,000

B.Using a= 0.05, calculate the probability of a Type II error occurring if the actual average listing is $230,000

D. Explain the differences in the results calculated in parts b and c