Answer
a. $H_{o}: μ = 218,600$
$H_{1}: μ < 218,600$
b. Type-I Error: Sample evidence leads real estate broker to believe that the mean has decreased> However, in fact it has not decreased.
c. Type-II Error: Sample evidence leads real estate broker to believe that the mean has not decreased. However, in fact it did decrease.
Work Step by Step
a. Null hypothesis (mean price of the home remains at $\$218,600$)
$H_{o}: μ = 218,600$
Alternative hypothesis (mean home price has decreased):
$H_{1}: μ < 218,600$
b. Type-I Error: Sample evidence leads real estate broker to believe that the mean has decreased. However, in fact it has not decreased. In other words, the scientists have rejected the null hypothesis ($H_o$), but it in fact is true.
c. Type-II Error: Sample evidence leads real estate broker to believe that the mean has not decreased. However, in fact it did decrease. In other words, the scientists have not rejected the null hypothesis ($H_o$), when in fact the alternative hypothesis ($H_1$) is true.
