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The life insurance industry maintains that the average worker in Saskatoon has no more than $25,000...

  1. The life insurance industry maintains that the average worker in Saskatoon has no more than $25,000 of personal life insurance.  You believe this to be too low.  You sample 100 workers in Saskatoon at random and find the sample average to be $26,650 of personal life insurance.  The population standard deviation is known to be $12,000.  Use α=0.05 throughout.
  1. (6) Test your belief using a significance level of 5%.
  2. (6)  Explain, in the context of this question, what is meant by a Type I error, a Type II error, and the power of the test?
  3. (5)  If the true average for this population is in fact $30,000, what is the probability of committing a Type II error?  
  4. (1) Calculate the power of the test.

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Expert Solution

milcah answered 10 months ago
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