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 in the table. Is it reasonable to conclude the percent is less now than 5 years ago?

a. What are the null and alternate hypotheses?

b. Compute the test statistic.

c. Compute the p-value.

d. What is your decision regarding the null hypothesis?

e. Interpret the result.

Transcribed Image Text:

Homeowner Five Years Ago Now Homeowner Five Years Ago Now Holt 17% 10% Lozier 35% 32% Pierse 20 39 Cieslinski 16 32 Merenick 29 37 Rowatti 23 21 Lanoue 43 27 Корpel Rumsey 33 12 Fagan 36 12 44 40 Bobko 43 41 McGinnis 44 42 Kippert 45 24 Pierce 28 22 San Roman 19 26 Roll 29 19 Kurimsky 49 28 Lang Miller 39 35 Davison 49 26 22 12