In 2005, Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act. This act made significant changes to the administration of bankruptcy relief. The Government Accountability Office ( GAO ) was commissioned to study the effects of the bankruptcy reform law on consumers. Attorney fees in consumer bankruptcy cases were studied by the GAO and reported in their 2008 Bankruptcy Reform report. In the period of Feb. to March 2007, there were 71,106 consumer bankruptcy cases. A Consumer rights group claimed the attorney fees for such cases were significantly higher that the average of $975.
To estimate legal fees for consumer bankruptcy cases, the GAO conducted a nationwide random sample of bankruptcy filings. Business bankruptcy cases and cases not involving attorneys were excluded. In the end, the GAO had n = 292 consumer cases with attorney involvement. The mean attorney fee in the sample is $1078 and the std. dev. is $592. Use an alpha level of .01.
1. Define the population, variable, and parameter you will use.
2. State the hypothesis. State the level of significance.
3. Name the test.
4. Conduct the test giving statistics, the test statistic and the P-value.
5. Write a conclusion that answers the question.
6. Find a 99% confidence interval.
7. What type of error could we have made in our conclusion?