Question 126144This question is from textbook Applied Statistics in Business and Economics
: Help please? I greatly need it with a lack of acceptable examples that are similiar to go by.
An auditor reviewed 25 oral surgery insurance claims from a particular surgical office, determining that the mean out-of-pocket patient billing above the reimbursed amount was $275.66 with a standard deviation of $78.11. (a) At the 5 percent level of significance, does this sample prove a violation of the guideline that the average patient should pay no more than $250 out-of-pocket? State your hypothesis and decision rule. (b) Is this a close decision?
This question is from textbook Applied Statistics in Business and Economics
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! An auditor reviewed 25 oral surgery insurance claims from a particular surgical office, determining that the mean out-of-pocket patient billing above the reimbursed amount was $275.66 with a standard deviation of $78.11. (a) At the 5 percent level of significance, does this sample prove a violation of the guideline that the average patient should pay no more than $250 out-of-pocket? State your hypothesis and decision rule. (b) Is this a close decision?
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Ho: mu=250
Ha: mu>250
alpha = 5%, so critical value is t = 1.645
Test Statistic: t(275.66) = (275.66-150)/[78.11/sqrt25] = 1.642555...
p-value = 0.056757
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Conclusion:
Fail to reject Ho because p-value is greater than 5%, but not by much.
(b) Is this a close decision?
You bet it is.
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Cheers,
Stan H.
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