A real estate agent in the coastal area of the Carolinas wants to compare the variation in the selling price of homes on the oceanfront with those one to three blocks from the ocean. A sample of 21 oceanfront homes sold within the last year revealed the standard deviationof the selling prices was $45,600. A sample of 18 homes, also sold within the last year, that were one to three blocks from the ocean revealed that the standard deviation was $21,330.
At the .01 significance level, can we conclude that there is more variation in the selling prices of the oceanfront homes?
An F-test is used to test if the standard deviations of two populations are equal. The test statistic is equal to
F = (s1)^2 / (s2)^2
where s1 and s2 are the sample standard …
The solution uses a statistical test to compare standard deviations and answer the question “can we conclude that there is more variation in the selling prices of the oceanfront homes?”.