document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=134229>Question 134229</A>This question is from textbook <A HREF=http://www.amazon.com/exec/obidos/ASIN/0072966939/algebrahomeworkh>Applied Statistics in Business and Economics</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 remibursed amount was $275.66 with a standard deviation of $78.11.  (a) At the 5% 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 hypotheses and decision rule.  (b) Is this a close decision?\r<BR>\n" );
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document.write( "Thanks for your help.\r<BR>\n" );
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document.write( "Applied Statistics in Business and Economics<BR>\n" );
document.write( "David P. Doane, Lori E. Seward<BR>\n" );
document.write( "Publisher: Boston : McGraw-Hill/Irwin, c2007.<BR>\n" );
document.write( "ISBN: 0072966939   DDC: 519.5   LCC: HF1017   Edition: (student ed.)  </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #98209 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=98209\">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 remibursed amount was $275.66 with a standard deviation of $78.11.<BR>\n" );
document.write( "(a) At the 5% 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 hypotheses and decision rule. <BR>\n" );
document.write( "Ho: mu = 250<BR>\n" );
document.write( "Ha: mu > 250<BR>\n" );
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document.write( "Critical Value for 1-tail t-test with df=24 and alpha=5% = 1.711<BR>\n" );
document.write( "Test statistic: t(275.66) = (275.66-250)/[78.11/sqrt(25)] <BR>\n" );
document.write( "= 25.66*5/78.11 = 1.6426<BR>\n" );
document.write( "p-value = P(1.6425 < t < 10 with df=24) = 0.0568<BR>\n" );
document.write( "Conclusion: Fail to reject Ho because p-value is greater than alpha= 5%.<BR>\n" );
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document.write( "(b) Is this a close decision? <BR>\n" );
document.write( "Yes, because the p-value is very close to alpha = 5%<BR>\n" );
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document.write( "Cheers,<BR>\n" );
document.write( "Stan H.<BR>\n" );
document.write( " </SPAN>\n" );
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