An insurance agent says the standard deviation of the total hospital charges for patients involved in...

An insurance agent says the standard deviation of the total hospital charges for patients involved in a crash in which the vehicle struck a construction barricade is less than $4000. A random sample of 28 total hospital charges for patients involved in this type of crash has a standard deviation of $4900. At alpha equals 0.10α=0.10 can you support the agent's claim? Use the P-value method to test the claim.

Solutions

Expert Solution

Solution: The null and alternative hypotheses are:

Under the null hypothesis, the test statistic is:

The p-value is:

Conclusion: Since the p-value is greater than the significance level 0.10, we, therefore, fail to reject the null hypothesis and conclude that there is not sufficient evidence to support the agents claim

orchestra answered 2 years ago

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