Z = (mean1 - mean2)/standard error (SE) of difference between means
SEdiff = √(SEmean1^2 + SEmean2^2)
SEm = SD/√n
If only one SD is provided, you can use just that to determine SEdiff.
Find table in the back of your statistics text labeled something like "areas under normal distribution" to find the proportion/probability of the Z score. Is it <.05?
An insurance company is reviewing its current policy rates.when originally setting the rates they believed that the average claim amount was 1800.00.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,and calculate a sample mean of 1950.00.Assuming that the standard deviation of claims is 500.00,and set a=0.05,test to see if the insurance company should be concerned.
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1 answer