Insurance adjusters are concerned that Jocko’s Garage might be setting unreasona

Question

Insurance adjusters are concerned that Jocko’s Garage might be setting unreasonably high cost estimates for car repairs. To test this, the insurance company sent 10 damaged cars to Jocko’s and to a competing garage for repair estimates. They found the following data:

a. Find the p-value. Enter your answer to at least 5 digits after the decimal point.

Car Jocko's estimate Competing garage estimate 1 500 400 2 1550 1500 3 1250 1300 4 1300 1300 5 750 800 6 1000 800 7 1250 1000 8 1300 1100 9 800 650 10 3300 3000

Explanation / Answer

The statistical software output for this problem is:

Paired T hypothesis test:
D = 1 - 2 : Mean of the difference between Jocko's estimate and Competing garage estimate
H0 : D = 0
HA : D > 0
Hypothesis test results:

Hence,

a) P - value = 0.00861

Difference Mean Std. Err. DF T-Stat P-value Jocko's estimate - Competing garage estimate 115 39.475731 9 2.9131823 0.00861

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