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Name: 1) An insurance company is reviewing its current policy rates. When or
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Description: 1) An insurance company is reviewing its current policy rates. When originally setting the rates they believed that the average claim amount was $1,800. They are concerned that the true mean is actually higher than this, because they could potentiall

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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1) An insurance company is reviewing its current policy rates. When originally setting the rates they believed that the average claim amount was $1,800. They are concerned that the true mean is actually higher than this, because they could potentially lose a lot of money.

d) Suppose they randomly select 40 claims, and calculate a sample mean of $1,950. Assuming that the population standard deviation of claims is $500, and set significance level= .05, and test to see if the insurance company should be concerned. What would the p-value be?(Show your work.)
e) Given an interpretation of what the p-value means in the context of the problem.
f) If significance level= 0.05, state a conclusion.

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