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Housing 2008 was a difficult year for the economy
There were a large number of foreclosures of family homes. In one large community, realtors randomly sampled 36 bids from potential buyers to determine the average loss in home value. The sample showed the average loss was $11,560 with a standard deviation of $1500.
a) What assumptions and conditions must be checked before finding a confidence interval? How would you check them?
b) Find a 95% confidence interval for the mean loss in value per home.
c) Interpret this interval and explain what 95% confidence means.
d) Suppose nationally, the average loss in home values at this time was $10,000. Do you think the loss in the sampled community differs significantly from the national average? Explain.
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Is this enough evidence to support Union's position? Use significance level of a = 0.05. You may suppose the mean annual salaries are normally distributed.
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