document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=127478>Question 127478</A>This question is from textbook <A HREF=http://www.amazon.com/exec/obidos/ASIN/9780072966930/algebrahomeworkh>Applied Statistics in Business and Eco</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 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?<BR>\n" );
document.write( "State your hypotheses and decision rule. (b) Is this a close decision?\r<BR>\n" );
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document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #93407 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=93407\">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 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?<BR>\n" );
document.write( "State your hypotheses and decision rule. (b) Is this a close decision?\r<BR>\n" );
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document.write( "Ho: mu <= 250<BR>\n" );
document.write( "Ha: mu > 250<BR>\n" );
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document.write( "Critical Value for one-tail t-test with alpha = 5% and 24 degrees of freedom<BR>\n" );
document.write( "t = 1.711<BR>\n" );
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document.write( "Test Statistic: <BR>\n" );
document.write( "t(275.66-250)/[78.11/sqrt(25)] = 1.6426<BR>\n" );
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document.write( "Conclusion: Fail to reject Ho because the test statistic is less than the<BR>\n" );
document.write( "critical value.  This sample does not prove a violation of the guideline.<BR>\n" );
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document.write( "Is it a close decision?: The probability difference between t=1.6426 and <BR>\n" );
document.write( "t=1.711 is about 0.0068 which is very small.  A slight variation in <BR>\n" );
document.write( "the test results could have caused us to reject Ho.<BR>\n" );
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document.write( "Cheers,<BR>\n" );
document.write( "Stan H.\r<BR>\n" );
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