The amount of income spent on housing is an important compon

The amount of income spent on housing is an important component of the cost of living. The total costs of housing for homeowners might include mortgage payments, property taxes, and utility costs (water, heat, electricity). An economist selected a sample of 20 homeowners in New England and then calculated these total housing costs as a percent of monthly income, 5 years ago and now. The information is reported below. Is it reasonable to conclude the percent is less now than 5 years ago?

Homeowner	Five Years Ago	Now	Homeowner	Five Years Ago	Now
1	17%	10%	11	35%	32%
2	20	39	12	16	32
3	29	37	13	23	21
4	43	27	14	33	12
5	36	12	15	44	40
6	43	41	16	44	42
7	45	24	17	28	22
8	19	26	18	29	19
9	49	28	19	39	35
10	49	26	20	22	12

Mean x =6.35

Std Deviation s = 12.4778

H0: Difference = 0
H1: D > 0

= 0.05

degree of freedom = n-1 = 20-1 = 19

Critical value = T from table 2 – t distribution when v=0.05 and n= 19 = 1.729

Test statistic T = (mean-0)/(std deviation / n)

(6.35 -0) / (12.4778 / 20) = 2.2759

Conclusion: Since 2.2759 > 1.729, we conclude that the percentage is less now than it was 5 years ago.

The amount of income spent on housing is an important component of the cost of living. The total costs of housing for homeowners might include mortgage payments

The amount of income spent on housing is an important compon

Solution

Get Help Now

Submit a Take Down Notice