# chapter exercises 9.64?

64 An auditor reviewed 25 oral surgery insurance claims from a particular surgical office, determining that the mean out-of-pocket patient billing above the reimbursed amount was \$275.66 with a standard deviation of \$78.11. (a) At the 5 percent level of significance, does this sample prove a violation of the guideline that the average patient should pay no more than \$250 out-of-pocket? State your hypotheses and decision rule. (b) Is this a close decision?

Relevance
• 10 years ago

Let X be the oral surgery insurance claims

n = 25

Xmean = 275.55

SD = 78.11

H0: μx ≤ 250

H1: μx > 250, α = 0.05

Decision Rule:

If (275.55 - 250)/(78.11/5) > Z(1 - 0.05), we reject H0.

If 1.63 ≯ 1.645, we don't reject H0.

Decision:

With a confidence of 95%, we conclude that the sample doesn't prove a violation of the guideline.

I we work with that grade of confidence, this isn't a closed decision!

Source(s): Standardized Normal Distribution.
• Anonymous
10 years ago

No, because ObamaCare would give the people their out-of-pocket money back after stealing it from the hard-working successfull Americans.