Business Decision Making: Hypothesis Testing - Analysis of Weekly Rent

This assignment focuses on business decision-making through hypothesis testing, specifically analyzing apartment rent data from two suburbs, New Town and Hurstville. The student utilizes t-tests to determine if the average weekly rent in New Town is greater than $450. The analysis involves calculating the t-statistic, determining the p-value, and comparing it to a significance level to reject or fail to reject the null hypothesis. Further analysis compares the rents between the two suburbs, employing a two-sample t-test to determine if the weekly rent in New Town is lower than in Hurstville. The assignment demonstrates the application of statistical methods to real-world business scenarios, illustrating how hypothesis testing can inform decisions about pricing and market analysis.

BUSINESS DECISION MAKING
Hypothesis Testing
STUDENT ID:
[Pick the date]

BUSINESS DECISION MAKING
Question 2
The chosen suburb 1 is New Town and suburb 2 is Hurstville. A sample of 50 values has
been obtained from the population of the apartment weekly rent for those properties situated
in the two suburbs selected.
New Town Rent - Hypothesis Testing
H0: Weekly rent for apartment in New Town is less than equal to $ 450
H1: Weekly rent for apartment in New Town is greater than $ 450
Relevant Test: Right tail t test
Relevant Inputs: 1) Sample mean = $ 513.38
2) Sample standard deviation = $ 177.04
3) Size of the sample = 50
Computation: T statistic = (513.38-450)/(177.04/√50) = 2.53
P value (t=2.53, df=49, one tail) = 0.00731
Decision Rule: If p value < significance level, reject H0 or else fail to reject H0.
Decision: Since, p value (0.007) < significance level (0.05), hence reject H0 and accept H1.
Thus, it is correct to claim that average weekly rent of apartments in New Town is higher
than $ 450.
Rent Comparison - Hypothesis Testing
H0: μNew Town - μHurstville ≤ 0
H1: μNew Town - μHurstville > 0
Relevant Test: Two independent sample means test assuming equal variance as the sample
standard deviations of the rents in two suburbs are similar and also the number of
observations is also the same.

BUSINESS DECISION MAKING
Computation:
Decision Rule: If p value < significance level, reject H0 or else fail to reject H0.
Decision: Since, one tail p value (0.39) > significance level (0.05), hence fail to reject H0.
Thus, it may be concluded that the claim with regards to the weekly rent of apartment in New
Town being lower than corresponding values in Hurstville is statistically incorrect.