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In: Statistics and Probability

An insurance company is reviewing its current policy rates. When originally setting the rates they believed...

An insurance company is reviewing its current policy rates. When originally setting the rates they believed that the average claim amount was $1800. They are concerned that the true mean is actually higher than this because they could potentially lose a lot of money. They randomly select 40 claims, and calculate a sample mean of $1950 and the sample standard deviation of claims is $500, test to see if the insurance company should be concerned. Use an α level of 0.01.[7 points]

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orchestra answered 2 years ago
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