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The average cost per square foot for the office rental space in the central business district of Petaling Jaya is RM23.58 with a standard deviation of RM5.11, according to Frost & Sullivan. A large real estate company wants to confirm this figure. The firm conducts a telephone survey of 95 offices in the central business district of Petaling Jaya and asks the office managers how much they pay in rent per square foot. Based on the survey, the sample average is RM22.83 per square foot.
a) Test whether the cost per square foot reported by Frost & Sullivan should be rejected. Usea = 0.05.
b) Compute the p-value for part (a) and interpret its meaning.
c) If the decision in part (a) is to fail to reject H0and if the actual average cost per square foot is RM22.30, what is the probability of committing a Type II error?
d) What is the power of the test and explain its meaning?
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