Answer to Question #120261 in Statistics and Probability for Parker

Question

part 2

1. An insurance company is reviewing its current policy rates. When originally setting the rates they believed that the average claim amount was $1,800. They are concerned that the true mean is actually higher than this, because they could potentially lose a lot of money. They randomly select 40 claims, which yield a sample mean of $1,950. Which of the following is the correct set of hypotheses for this scenario?


A. H_0: x bar = 1,800
H_A: x bar > 1,800

B. H_0: μ=1,800
H_A: :μ>1,800

C. H_0 :μ=1,950
H_A: μ>1,800

D.H_0: μ=1,800
H_A :μ>1,950

3. Two-sided alternative hypotheses are phrased in terms of:

A. ≤ or ≥
B. ≈ or =
C. < or >
D. ≠

4. A Type 1 error occurs when the null hypothesis is

A. not rejected when it is true
B. not rejected when it is false
C. rejected when it is true
D. rejected when it is false

Answer 1

$\text{The correct set of hypotheses for this scenario is}\\ B. H_0: μ=1,800\\ H_A: μ>1,800\\ 3. \text{Two-sided alternative hypotheses are}\\ \text{ phrased in terms of:} \neq\\ 4.\text{ A Type 1 error occurs when the null hypothesis}\\ is\;\\ C. \text{rejected when it is true}$