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Hypothesis Testing of Mean

1 "Faced with rising fax costs, a firm issued a guideline that transmissions of 10 pages or more
should be sent by 2-day mail instead. Exceptions are allowed, but they want the average to be 10
or below. The firm examined 35 randomly chosen fax transmissions during the next year, yielding
a sample mean of 14.44 with a standard deviation of 4.45 pages. (a) At the .01 level of significance,
is the true mean greater than 10? (b) Use Excel to find the right-tail p-value."

2 " 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?"


Solution Summary

The solution provides step by step method for the calculation of testing of hypothesis. Formula for the calculation and Interpretations of the results are also included. Interactive excel sheet is included. The user can edit the inputs and obtain the complete results for a new set of data.