Because of uncertainty in real estate markets, many homeowners are considering remodeling and constructing additions rather than selling, probably the most expensive room in the house to remodel is the kitchen, with an average cost of about $23,400. In terms of resale value, is remodeling the kitchen worth the cost? The following cost and resale figures are published by remodeling magazine for 11 cities. Assume the differences are normally distributed in the population. CityCostResaleAtlanta$20427$25163Boston$27255$24625Des Moines$22115$12600Kansas City$23256$24588Louisville$21877$19267Portland$24255$20150Raleigh$19852$22500Reno$23624$16667Ridgewood$25885$26875San Francisco$28999$35333Tulsa$20836$16292 Requirements:Use the above data to construct a 99% confidence interval for the difference between cost and added resale value of kitchen remodeling. At 1% level of significance, is there evidence that the difference between cost and added resale value of kitchen remodeling exist? Which test statistics is applicable in this case and why?

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Description: Because of uncertainty in real estate markets, many homeowners are considering remodeling and constructing additions rather than selling, probably the most expensive room in the house to remodel is the kitchen, with an average cost of about $23,400.

Answered: Because of uncertainty in real estate…

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018

18th Edition

ISBN:9780079039897

Author:Carter

Publisher:Carter

Chapter10: Statistics

Section10.5: Comparing Sets Of Data

Problem 26PFA

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Because of uncertainty in real estate markets, many homeowners are considering remodeling and constructing additions rather than selling, probably the most expensive room in the house to remodel is the kitchen, with an average cost of about $23,400. In terms of resale value, is remodeling the kitchen worth the cost? The following cost and resale figures are published by remodeling magazine for 11 cities. Assume the differences are normally distributed in the population.

City	Cost	Resale
Atlanta	$20427	$25163
Boston	$27255	$24625
Des Moines	$22115	$12600
Kansas City	$23256	$24588
Louisville	$21877	$19267
Portland	$24255	$20150
Raleigh	$19852	$22500
Reno	$23624	$16667
Ridgewood	$25885	$26875
San Francisco	$28999	$35333
Tulsa	$20836	$16292

Requirements:

Use the above data to construct a 99% confidence interval for the difference between cost and added resale value of kitchen remodeling.
At 1% level of significance, is there evidence that the difference between cost and added resale value of kitchen remodeling exist?
Which test statistics is applicable in this case and why?

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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