Most of the claims on a small company\'s medical insurance are in the neighborho

Question

Most of the claims on a small company's medical insurance are in the neighborhood of $800, but a few are very large. As a consequence, the distribution of claims is highly skewed to the right and possesses a standard deviation s equal to $2,000. The first 40 claims received this month possess a mean x equal to $930. Suppose that we were to regard this group of 40 claims as a random sample from the population of all potential claims, and use x to estimate the population mean µ.

a. what is the margin of error in estimation?

b. Can you make a precise statement about the probability that the error of estimation will be less than the margin in part (a)? Explain.

Explanation / Answer

a) under the 95% confidence in interval z(a/2) = 1.96 Margin of Error = 1.96*2000/sqrt(40) =619.8064 b) yes under the sampling tecnique

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.