Test to see if insurance company should not be concerned


An insurance company is reviewing its current policy rates. When originally setting the rates they believed that the average claim amount was $1,900. They are concerned that the true mean is actually higher than this, because they could potentially lose a lot of money. They randomly select 25 claims, and calculate a sample mean of $2000. Assuming that the population standard deviation of claims is $500, test to see if the insurance company should not be concerned (level of significance = .05)

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Basic Statistics: Test to see if insurance company should not be concerned
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