Hypothesis test - Example A real estate company believes that the cost per square foot in a particular subdivision is $68 or less. A sample of 30 transactions revealed a mean of $74.8 with a standard deviation of $19.2. The null and alternative hypotheses are: H0: mu <= $68 H1: mu > $68 The standardized test statistic is: z = (74.77 - 68) / (19.2 / 3.5) = 1.93 where 3.5 is the square root of 30 (the number of observations). The critical value using a significance level of 5% is 1.645. The rejection region are all the values to the right of 1.645. Given that the test statistic falls in the rejection region (since 1.94>1.645), the null hypothesis is rejected. The result of the test means that sample information shows evidence that the cost per square foot in this particular subdivision is not less than $68.