In 2003, it was reported that 40% of all car accidents in Connecticut

You have recently taken on work as the quantitative business analyst for a real estate agency in the US. The agency has in the past followed some adhoc rules to form valuations of houses and properties (a valuation is an estimated of the value or price of a property). The agency has recently acquired some data on house sales, and have hired you to help analyse it and answer some questions they have. You are required to present and explain all your assumptions and discuss whether they could be true, or not, in each case.

Task 2 (15 marks)

The agency has always valued houses higher if they are primarily made of brick. In fact they usually add on an extra $15000 to the valuation if it is a brick house.

Separate the data into two groups. Group 1: Brick houses; Group 2: Non-brick houses.

i. Fully investigate the hypothesis that brick houses sell for more money on average than non-brick houses. State all required assumptions, indicate your chosen level of significance (and why you chose it) and give a plain-English conclusion.

ii. Test the agency’s hypothesis that $15000 should be added to the valuation of brick houses. Does the sales data support that?

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