Use the following to answer questions :
The Eagle Ridge Contractors Association claims the average price of a home in their subdivision is $125,150 with a standard deviation of $7,350. A sample of 36 homes for sale in this subdivision had an average selling price of $123,550. The Eagle Ridge Home Owners Association is interested in knowing if the costs of homes for sale in this subdivision are actually lower than claimed?
-Compute the test value?
A) -1.31
B) 1.31
C) -1.52
D) 1.52

Question

Quizplus · Accepted Answer

To compute the test value, we use the formula:
test value = (sample mean - population mean) / (standard deviation / sqrt(sample size))

Plugging in the values given:
test value = (123550 - 125150) / (7350 / sqrt(36))
test value = -1600 / 1225
test value = -1.31

Therefore, the test value is -1.31, which corresponds to choice A.

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