QUESTION 5 [Red Cross Red Shield] The distribution of the amount paid in health claims by Red Cross Red Shield (RCRS), a medical insurance company, on individual health insurance plans for college students has mean $400, median $700, and standard deviation $500. Instead of annual amount paid to an individual, we are interested in the average amount paid of a sample. If we select a random sample of n = 60 plan members and compute the average amount paid to the 60 plan members (i.e., X ). What is the expected value of the sample average, E[ X ]? O a. $1,500 O b. $400 O C. $48,000 O d. $800 QUESTION 6 [Red Cross Red Shield] The distribution of the amount paid in health claims by Red Cross Red Shield (RCRS), a medical insurance company, on individual health insurance plans for college students has mean $500, median $400, and standard deviation $550. Consider the variation of the amount paid of a sample of 40 plan members. Do you think that the standard deviation of the sample mean of participants (Stdev[ X ]) is smaller than, larger than, or equal to the standard deviation of individual annual amount paid? Why? O a. Stdev[ X ] should be the same as the standard deviation of individual annual amount paid. O b. Stdev( X ] should be smaller than the standard deviation of individual annual amount paid: We take a sample of people (as opposed to picking one person) and compute the average. The variation of the average is much smaller than the variation of a single value because individual variations will be evened out when we compute the average. O C. Not enough information is given to answer this question O d. Stdevi X ] should be larger than the standard deviation of individual annual amount paid, since the sample has multiple individuals