Question

The records of a casualty insurance company show that, in the past, its clients have had a mean of 1.9 auto accidents per day with a variance of 0.0025. The actuaries of the company claim that the variance of the number of accidents per day is no longer equal to 0.0025. Suppose that we want to carry out a hypothesis test to see if there is support for the actuaries' claim. State the null hypothesis H, and the alternative hypothesis H, that we would use for this test. x р 6 o s D< Os > x 5 MacBook Air

Answer 1

Here the mean accidents per day is 1.9

The variance is 0.0025, here we want to test the claim that the variance of the number of accidents per day is no longer equal to 0.0025.

The hypothesis are given by,

$\therefore H_{0}:\sigma^2=0.0025$[Null hypothesis]

$\therefore H_{1}:\sigma^2<0.0025$[Alternative hypothesis]