Question

Suppose the national average dollar amount for an automobile insurance claim is $711.59. You work for an agency in Michigan and you are interested in whether or not the state average is different from the national average. Treating the national mean as the historical value, What are the appropriate hypotheses for this test?

	1) HO: μ = 711.59 HA: μ ≠ 711.59
	2) HO: μ > 711.59 HA: μ ≤ 711.59
	3) HO: μ ≥ 711.59 HA: μ < 711.59
	4) HO: μ ≠ 711.59 HA: μ = 711.59
	5) HO: μ ≤ 711.59 HA: μ > 711.59

Answer 1

Solution :

From given information ,

Solution :

This is the two tailed test .

The null and alternative hypothesis is ,

H₀ :   $\mu$ = 711.59

H_a : $\mu$ $\neq$ 711.59

Option 1) is correct .