Problem 3 (Hypothesis testing for Variance). Rentals: We would like to determine whether the standard deviation on monthly rents for one-bedroom apartments is smaller than $200 in Pittsburgh. That is, we hope to reject the null hypothesis that the standard deviation is $200 or greater. The monthly rents on a random sample of 7 one-bedroom apartments are listed below (in $'s). Assume these monthly rents are normally distributed. 725 652 662 723 926 867 901

(3.1) . Obtain an estimate of the standard deviation given the data. (3.2a). State the alternative hypotheses for the test (3.2b) Compute value of the test statistic (multiple choice). A) 1.72

B)2.00

C)2.34

D) 3.36

(3.3) Test the null hypothesis using critical value at = 0.01.; what is the critical value? (Multiple Choice) A) 0.872

B) 1.239

C) 3.143

D) 8.466

(3.4) Moderate. Repeat the test at = 0.10 can conclude that the standard deviation of sales for each week is smaller than $200?