An insurancecompany randomly selects 100 claims froma chain of dialysis clinics and conducts an audit. Themean overpayment per claimin this sample is $21.32.

The company is interested in extrapolating this information to the population of all claims from this chain. They want to make a statement of the form “with confidence level 95%, the mean overpayment per claim is at least .”

(a) Based on past experience, the company assumes that σ = 32.45. Compute the appropriate confidence limit.

(b) What is likely to be true about the shape of the distributionfor the individual overpayments?Why is the large sample size a critical part of this problem? LO.1