Qnt 351 - Hypothesis Testing Strategy

Learning Team Reflection

QNT/351

Hypothesis Testing Strategy

In the prior two assignments our team has focused on using descriptive statistics to draw conclusions about the relationship between the size of a home and its price. The underlying hypothesis has been that prices are higher when the size of the homes is larger. Of course, there are many other factors that affect home prices such as location, whether the home is new or pre-owned, if the home has special amenities like a pool or a garage, among other things.

The purpose of this paper is to formulate a hypothesis test related to our course-long research topic. This particular paper will state the hypothesis and explain the steps required to perform its test.

Research Question and Hypothesis

Do larger homes command higher prices? This is the research question our team will answer through a hypothesis test. We will use a one-sample test of hypothesis to examine the research question. Looking at the descriptive statistics results from prior weeks we know that the median home price according to the real estate dataset is $213,600, and the median size is 2200 sq. ft. Our hypothesis will be that the average price of homes larger than 2200 sq. ft. is greater than $213,600. In other words, we are hypothesizing the mean price of homes, which, in turn, are larger than the median home, however, are greater than the median home price.

Verbally, the null and alternate hypotheses are:

Ho: the mean price of homes larger than 2200 sq. ft. is lower than or equal to $213,600.

H1: the mean price of homes larger than 2200 sq. ft. is greater than $213,600.

Numerically, these hypotheses can be written as:

Ho: μ ≤ 213,600

H1: μ > 213,600

Hypothesis Testing

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