Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The price of a standard health insurance is 1,500 per year. An insurance company is interested to know if it should offer this insurance
The price of a standard health insurance is 1,500 per year. An insurance company is interested to know if it should offer this insurance for this price as a new service to its clients. Re-search has shown that this will be profitable if the average yearly health costs per client are less than 1,200. To investigate the average yearly health costs per client, the company has randomly selected 25 clients. The average costs of these clients are 1,100 per year. Suppose that the yearly costs per client are normally distributed but that the standard deviation is not known. The sample standard deviation of the 25 selected clients appears to be 300. Perform a test (at a 5% significance level) to investigate whether it is profitable to offer the health insurance. (Hint. You may draw a conclusion as follows: we should decide not to offer the insurance, because it is not profitable.)
Step by Step Solution
★★★★★
3.40 Rating (147 Votes )
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started