Question

In: Statistics and Probability

A fire insurance company thought that the mean distance from a home to the nearest fire...

A fire insurance company thought that the mean distance from a home to the nearest fire department in a suburb of Chicago was at least 4.7 miles. It set its fire insurance rates accordingly. Members of the community set out to show that the mean distance was less than 4.7 miles. This, they thought, would convince the insurance company to lower its rates. They randomly identified 64 homes and measured the distance to the nearest fire department from each. The resulting sample mean was 4.4. If σ = 2.4 miles, does the sample show sufficient evidence to support the community's claim at the α = 0.05 level of significance?

A.) Conduct a hypothesis test using the classical approach.

B.) Conduct a hypothesis test using the p-value approach.

Solutions

Expert Solution


Related Solutions

A fire insurance company thought that the mean distance from a home to the nearest fire...
A fire insurance company thought that the mean distance from a home to the nearest fire department in a suburb of Chicago was at least 5.9 miles. It set its fire insurance rates accordingly. Members of the community set out to show that the mean distance was less than 5.9 miles. This, they thought, would convince the insurance company to lower its rates. They randomly indentified 62 homes and measured the distance to the nearest fire department from each. The...
A fire insurance company thought that the mean distance from a home to the nearest fire...
A fire insurance company thought that the mean distance from a home to the nearest fire department in a suburb of Chicago was at least 5.9 miles. It set its fire insurance rates accordingly. Members of the community set out to show that the mean distance was less than 5.9 miles. This, they thought, would convince the insurance company to lower its rates. They randomly indentified 60 homes and measured the distance to the nearest fire department from each. The...
A fire insurance company thought that the mean distance from a home to the nearest fire...
A fire insurance company thought that the mean distance from a home to the nearest fire department in a suburb of Chicago was at least 4.7 miles. It set its fire insurance rates accordingly. Members of the community set out to show that the mean distance was less than 4.7 miles. This, they thought, would convince the insurance company to lower its rates. They randomly identified 64 homes and measured the distance to the nearest fire department from each. The...
Fire Damage: A fire insurance company is interested in investigating the effect of the distance between...
Fire Damage: A fire insurance company is interested in investigating the effect of the distance between the burning house and the nearest fire station (miles) on the amount of fire damage (thousands of dollars) in major residential fire. A random sample of 15 recent fires in a suburb is selected. The data set can be found in the excel file Fire with variables name Distance and Damage. Source: McClave, J. & Sincich, T. (2015). Statistics. (12th edition). M. A.: Pearson....
A property and casualty insurance company (which provides fire coverage for dwellings) felt that the mean...
A property and casualty insurance company (which provides fire coverage for dwellings) felt that the mean distance from a home to the nearest fire department in rural Alabama was at least 10 miles. It set its fire insurance rates accordingly. Members of the community set out to show that the mean distance was less than 10 miles due to the increased number of volunteer fire departments. This, they felt, would convince the insurance company to lower its rates. They randomly...
A potential customer for a $50,000 fire insurance policy possesses a home in an area that,...
A potential customer for a $50,000 fire insurance policy possesses a home in an area that, according to experience, may sustain a total loss in a given year with probability of 0.001 and a 50% loss with probability 0.01. Ignoring all other partial losses, what premium should the insurance company charge for a yearly policy in order to break even on all $50,000 policies in this area?
A customer for a $50,000 fire insurance policy has a home in an area that may...
A customer for a $50,000 fire insurance policy has a home in an area that may sustain a total loss in a given year with a probability of 0.001 and a 50% loss with a probability of 0.01. There is a 0.989 chance that the customer will make no claim in the coverage year. This same customer also wants a $20,000 renter’s insurance policy. The probability of a total loss is 0.005, the probability of a 50% loss is 0.015,...
Mandren Inc. has a fire insurance policy from the Blundi Insurance Company with a 90% coinsurance...
Mandren Inc. has a fire insurance policy from the Blundi Insurance Company with a 90% coinsurance clause based on replacement cost. The replacement cost of the building is $600,000. The face amount of the policy Mandren purchases is $400,000. If a covered loss in the amount of $550,000 occurs, how much will Mandren collect from their insurer? (round to the nearest dollar) $422,232 $352,708 $400,000 $411,111
Ruth obtains a fire insurance policy on her house from Safety Insurance Company. Later, after she...
Ruth obtains a fire insurance policy on her house from Safety Insurance Company. Later, after she moves out and the house is empty, a fire destroys the structure. Most fire insurance policies require that at the time of a loss, the insured premises be a. vacant and uninhabitable b. unoccupied but habitable c. empty d. occupied Lighting Concepts, Inc., a trade fixture vendor and installer, wants to insure itself against injuries to employees and others on the premises during and...
An insurance company is considering offering fire insurance to customers in a certain state.
  An insurance company is considering offering fire insurance to customers in a certain state. After examining thousands of records of insurance claims in the area, they have come up with the following information: Payout Number of Claims $58,971 22 28,117 602 0 2,972 First convert the table into a probability distribution by dividing each number in the "Claims" column by the total number of claims. Take probability calculations to 3 decimal places. Now, let X be the expected payout....
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT