document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=153288>Question 153288</A>This question is from textbook <A HREF=http://www.amazon.com/exec/obidos/ASIN/9780072966930/algebrahomeworkh></A><BR>\n" );
document.write( ": <I><SPAN STYLE=\"word-break: break-all;\">  An auditor reviewed 25 oral surgery insurance claims from a particular surgical office, determining<BR>\n" );
document.write( "that the mean out-of-pocket patient billing above the reimbursed amount was $275.66 with a<BR>\n" );
document.write( "standard deviation of $78.11. (a) At the 5 percent level of significance, does this sample prove a<BR>\n" );
document.write( "violation of the guideline that the average patient should pay no more than $250 out-of-pocket?<BR>\n" );
document.write( "State your hypotheses and decision rule. (b) Is this a close decision?<BR>\n" );
document.write( " </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #112835 by </B><A HREF=/tutors/aboutme.mpl?userid=stanbon><B>stanbon(75887)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=stanbon><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=112835\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> 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 astandard deviation of $78.11. <BR>\n" );
document.write( "(a) At the 5 percent level of significance, does this sample prove a<BR>\n" );
document.write( "violation of the guideline that the average patient should pay no more than $250 out-of-pocket?<BR>\n" );
document.write( "State your hypotheses and decision rule.<BR>\n" );
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document.write( "Ho: u = 250<BR>\n" );
document.write( "Ha: u > 250<BR>\n" );
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document.write( "Critical value for one-tail test with alpha = 5% and df= 24<BR>\n" );
document.write( "t = 1.711<BR>\n" );
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document.write( "Rule: Reject Ho if test statistic is greater than 1.711.<BR>\n" );
document.write( "Test statistic: t(275.66) = (275.66-250)/[78.11/sqrt(25)] = 1.642555..<BR>\n" );
document.write( "Conclusion: Fail to reject Ho since test statistic is not in the rejection interval.<BR>\n" );
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document.write( "(b) Is this a close decision?<BR>\n" );
document.write( "p-value = P(1.711 < t < 100; with df=24) = 0.49989<BR>\n" );
document.write( "Comment: Since p-value is so close to 5% this is a close decision.<BR>\n" );
document.write( "==================<BR>\n" );
document.write( "Cheers,<BR>\n" );
document.write( "Stan H.<BR>\n" );
document.write( " </SPAN>\n" );
document.write( "</TD></TR></TABLE>\n" );