1.(15 points) An extensive study of the cost of health care in the US presented data showing that the mean spending per Medicare enrollee in 2003 was $6883 (Money, Fall 2003). To investigate difference across the country, a researcher took a sample of 40 Medicare enrollees in Indianapolis. For the Indianapolis sample, the mean 2003 Medicare spending was $5980 and the standard deviation was $2518.

a.State the hypothesis if we would like verify whether the mean annual Medicare spending in Indianapolis is lower than the national average;

b. Use the preceding sample results to compute the test statistic and the p-value;

c. Use significance .05 , what is your conclusion.

d. Develop a 90% confidence interval estimate for the mean annual Medicare spending in Indianapolis.