Question

Question 10 1 pts An automobile insurance company believes the average claim amount has increased from its historical value of $900. To test this, they randomly select 80 claims and calculate the sample mean as $889. Assuming o = $50, at the 4% significance level, is there enough evidence to support the insurance company's beliefs? O Yes, by not rejecting the null hypothesis, there is enough evidence to support their beliefs. O No, by not rejecting the null hypothesis, there is not enough evidence to support their beliefs O No, by rejecting the null hypothesis, there is not enough evidence to support their beliefs O Yes, by rejecting the null hypothesis, there is enough evidence to support their beliefs.

Answer 1

null hypothesis:Ho μ		=	900
Alternate Hypothesis:Ha μ		>	900
for 0.04 level with right tail test , critical z=			1.750
Decision rule:reject Ho if test statistic z>1.75
	population mean μ=	900
	sample mean 'x̄=	889.000
	sample size    n=	80.00
	std deviation σ=	50.000
	std error ='σx=σ/√n=	5.5902
	test stat z = '(x̄-μ)*√n/σ=	-1.97

since test statistic falls in rejection region we reject null hypothesis

O Yes, by rejecting the null hypothesis, there is enough evidence to support their beliefs.