Suppose the national average dollar amount for an automobile insurance claim is

Question

Suppose the national average dollar amount for an automobile insurance claim is $820.64. You work for an agency in Michigan and you are interested in whether or not the state average is greater than the national average. The hypotheses for this scenario are as follows: Null Hypothesis: ? ? 820.64, Alternative Hypothesis: ? > 820.64. You take a random sample of claims and calculate a p-value of 0.2053 based on the data, what is the appropriate conclusion? Conclude at the 5% level of significance. Question 11 options:

1) The true average claim amount is less than or equal to $820.64.

2) We did not find enough evidence to say the true average claim amount is higher than $820.64.

3) We did not find enough evidence to say the true average claim amount is less than $820.64.

4) The true average claim amount is significantly higher than $820.64.

5) We did not find enough evidence to say a significant difference exists between the true average claim amount and $820.64.

Explanation / Answer

p - value = 0.2053

Since p - value is greater than 5%, we do not reject Ho. Hence,

Option 2 is correct.

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