Credit card companies sometimes hire a collection agency to collect money from d

Question

Credit card companies sometimes hire a collection agency to collect money from delinquent cardholders. To justify the cost of using the collection agency, the agency must collect an average of at least $300 per customer. After a trial period during which the agency attempted o llect rom a random sample 0 1 de nquent cardholders the 90% confidence interval on he mean colected amount was one as r 3 75), iver this wn trecommendation would u make to the credit card company about using the collection agency? What are the appropriate hypotheses for this situation? Ho: The mean collected amount Ha: The mean collected amount Based on the confidence interval, we should The sample mean is V S300. V $300 the null hypothesis. There evidence to conclude that the mean collected amcunt $300 at thelevel of significance. Vthe target mean of $300, so the company | money on the trial. The company should The confidence interval indicates that the mean Click to select your answerls)

Explanation / Answer

Ho: Sample Mean >= 300

H1: Sample Mean < 300

Based on the CI, we should reject the null hypothesis. There is statistically significant evidence to conclude that the mean collected amount is more than 300 at the 10% level of significance

The sample mean is more than the target mean of 300$ and so the company need not hire the collection agency. The CI indicates that the mean is out of the CI bounds and so we can reject the null.

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