Three years ago, the mean price of an existing single-family home was $243 comma 779. A real estate broker believes that existing home prices in her neighborhood are lower.

a)

Determine the null and alternative hypotheses.

b)

Explain what it would mean to make a Type I error.

(c)

Explain what it would mean to make a Type II error.

(a) State the hypotheses.

Upper H 0:

mu

sigma

p

greater than

equals

less than

not equals

$

nothing

Upper H 1:

sigma

p

mu

greater than

not equals

equals

less than

$

nothing

(Type integers or decimals. Do not round.)

(b) Which of the following is a Type I error?

A.

The broker rejects the hypothesis that the mean price is $243 comma 779, when it is the true mean cost.

B.

The broker fails to reject the hypothesis that the mean price is $243 comma 779, when the true mean price is less than $243 comma 779.

C.

The broker rejects the hypothesis that the mean price is $243 comma 779, when the true mean price is less than $243 comma 779.

D.

The broker fails to reject the hypothesis that the mean price is $243 comma 779, when it is the true mean cost.

(c) Which of the following is a Type II error?

A.

The broker fails to reject the hypothesis that the mean price is $243 comma 779, when it is the true mean cost.

B.

The broker fails to reject the hypothesis that the mean price is $243 comma 779, when the true mean price is less than $243 comma 779.

C.

The broker rejects the hypothesis that the mean price is $243 comma 779, when the true mean price is less than $243 comma 779.

D.

The broker rejects the hypothesis that the mean price is $243 comma 779, when it is the true mean cost.

Click to select your answer(s).