Question
In: Economics
You have been provided information on summary statistical data for two neighborhoods. Specifically, you have been...
- You have been provided information on summary statistical data
for two neighborhoods. Specifically, you have been provided
calculations on the Average Price Per Square Foot, Average Age and
Average, and the Average Prices for houses in the two neighborhoods
and the Standard Deviation of each variable. Apply the method of
Confidence Intervals at (97%) to Estimate answer the question
whether:
- Average Age of House in each neighborhood is significantly different from 60 years
- Average Price of Houses in each neighborhood is significantly different from $415,000
- List at least two reasons that you think that the Average Price
of houses and the Average Age of Houses in one neighborhood will be
different from the other neighborhood in the file (You may use
personal knowledge of the neighborhoods).
Comparative Descriptive Statistics – Arocher vs Borough Park
Average Price per Square Foot, Average Age of House & Average Price of House
Neighborhood and
Sample Size (n)
Average
Standard Error
Standard Deviation
Average Age of House
Staten Island, Arocher (40)
39.4250
4.48128
28.34213
Brooklyn, Borough Park (49)
91.6939
2.04233
14.29628
Average Price of House
Staten Island, Arocher (40)
$396,374.30
$14,930.990
$94,431.873
Brooklyn, Borough Park (49)
$696,638.78
$24,093.715
$168,656.005
Solutions
Expert Solution
The formula for Confidence Interval is important here: [Average - tcrit * Standard Error, Average + tcrit * Standard Error].
The value that we are testing for, through the Null Hypothesis, if does not lie in the range, we reject the Null Hypothesis. If we reject the Null Hypothesis, that means the average is significantly different from the value that we are testing for.
The t critical value can be found from the table or also using the formula in Excel: =T.INV.2T(Level of Significance, degrees of freedom)
Degrees of Freedom: Sample size - 1.
The Solution has been provided below.
Rahul Sunny answered 1 year agoRelated Solutions
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