Lexington Housing Prices

In: Business and Management

Submitted By choool
Words 1072
Pages 5
INTRODUCTION In the town of Lexington, Massachusetts, the real estate company VALMAX has received many complaints from two sets of customers: the first set believes that they were advised to post asking-prices for their houses that were too low compared to other brokers’ listings while the second set believes that they were advised to accept selling-prices for houses that they purchased that were too high relative to the selling-prices for houses brokered by other realtors. Based on the given data for both VALMAX and the other brokers (will henceforth be called “OTHERS”), it is decided that the clients’ complaints are justified. In order to properly come up with this conclusion, the correct data must first be chosen, the null and alternative hypotheses must be stated, the degrees of freedom will be calculated, the rejection region will be defined, and ultimately, the test statistic will be calculated and interpreted. After this, there are three methods for coming up with the end conclusion, the first being qualitative and the last two being quantitative.
ANALYSIS
Choosing the Data:
Three sets of data are given for both VALMAX and OTHERS for which we assume to be normally distributed: asking prices, selling prices, and the differences between the two. Either the asking/selling prices can be used or the differences data can be used, but not both. The reason why we have chosen to not use the asking and selling price data is because we cannot distinguish between the buying and selling agents. Also, we would have to assume that the asking and selling prices of VALMAX and OTHERS are in similar neighborhoods. Because there are two sets of discontent customers, the data for asking and selling prices would have to be combined in some fashion as to account for both sets of complaints. For these reasons, we have chosen to only use the difference data.…...

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