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An insurance company is reviewing its current policy rates. Originally the average claim amount was $2 100. Suppose a researcher believes that the mean claim is now lower. The researcher randomly selects 70 claims and calculates the sample mean to be $1950. Assume that the population standard deviation of all claims is $400.
At a 1% level of significance, carry out an appropriate hypothesis test to determine whether the average insurance claim is now lower than $2 100. Assume the claim amounts are normally distributed
(i) Write the null hypothesis and alternative hypothesis, the type and direction of the test.
(ii) Find the critical value and write the decision rule.
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Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..
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