Question

Because of the uncertainty in real estate markets, many homeowners are remodeling and constructing addition rather than selling. The most expensive room in the house to remodel is the kitchen.   The table below shows the Cost and Resale value figures for kitchen remodeling in 10 cities. Realtors claim remodeling a kitchen generally adds more resale value to the house than the remodel costs. At α = 0.02, is there enough evidence to support the realtors’ claim?

City	Atlanta	Boston	Des Moines	Kansas City	Louisville	Portland	Raleigh-Durham	Reno	San Francisco	Tulsa
Cost	$20,427	$27,255	$22,115	$23,256	$21,887	$24,255	$19,852	$23,624	$28,999	$20,836
Resale	$25,163	$24,625	$12,600	$24,588	$19,267	$29,150	$22,500	$16,667	$35,333	$16,292

• Should you use a two-sample t-test or a paired-difference t-test to investigate?      _______________
• Explain your choice of tests? ______________________________________________________

H₀:                                                                                            Level of significance (α):   α =   

H_A:                                                                                           Type test:     two-tailed    left tail      right tail

Specify the random variable and distribution to be used in this hypothesis test.

Calculate the p-value                                                          Draw a graph and show the p-value

Show your work and any calculator functions used.

                   

Compare the p-value with α                             Decide to Reject or Fail to reject the null hypothesis                   

                   

Conclusion. State your results in non-technical terms

Answer 1