Answer:
a) (A) H0: u = $243,706;
--------H1:u<$243,706
b) (A) The broker rejects the hypothesis that the mean price is $243,706, when it is the true mean cost.
c) (C) The broker fails to reject the hypothesis that the mean price is $243,706, when the true mean price is less than $243,706
Step-by-step explanation:
a) The hypothesis test to be conducted will be:
H0: u = $243,706; H1: u < $243,706
Because, the estate broker believes the mean price has decreased, the alternative hypothesis states that, u is less than $243,706.
(b) In type I error, we reject null hypothesis, H0, when it is true. Therefore the type I error in this case will be:
The broker rejects the hypothesis that the mean price is $243,706, when it is the true mean cost.
(c) In type II error, the null hypothesis, H0, is not rejected when it is not true.
Therefore, the type II error will be:
The broker fails to reject the hypothesis that the mean price is $243,706, when the true mean price is less than $243,706
