An insurance company is reviewing its current policy rates

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An insurance company is reviewing its current policy rates. When originally setting the rates they believed that the average claim amount was $1, 800. They are concerned that the true mean is actually higher than this, because they could potentially lose a lot of money. They randomly select 40 claims, and calculate a sample mean of $1, 950 and a sample standard deviation of $800. Set alpha = 0.05 and test to see if the insurance company should be concerned.

Reference no: EM131377271

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