Math Problem Statement
Example. 2
Big Shoulders Insurance Company took a random sample of 50 insurance claims paid out during the last year and found that the mean was $1570 and the standard deviation was $260. Find and interpret a 90% confidence interval for the parameter of interest. The industry standard for last year was an average claim of $1540.Based on your interval computed above, does it appear that Big Shoulder’s claims are above average? Explain.
Solution
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Math Problem Analysis
Mathematical Concepts
Confidence Intervals
Sampling Distributions
Hypothesis Testing
Formulas
Confidence Interval formula: CI = x̄ ± z * (σ/√n)
Standard Error: SE = σ/√n
Margin of Error: ME = z * SE
Theorems
Central Limit Theorem
Normal Distribution
Suitable Grade Level
College Level (Statistics)
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