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Population Mean

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Insurance companies partially base automobile insurance rates on the mileage per year of the insured car. The average passenger vehicle in the United States is driven 11.3 thousand miles per year. In a Florida town, the average of 42 residents is found to be 9.8 thousand miles per year with a standard deviation of 5.8 thousand miles. It is claimed that the driving habits of these residents are different from the rest of the country. Is this claim supported at the 2% level of significance? Assume a normal population. Use the P-value method.

a. By finding the 90% confidence interval of the population mean, is the claim in question #7 supported at the 0.10 level of significance? Justify your answer.
b. Find the minimum sample size for the 95% confidence interval, if the maximum error of estimate is to be 0.55 thousand miles.

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Solution Summary

Insurance companies partially base automobile insurance rates on the mileage per year of the insured car. The average passenger vehicle in the United States is driven 11.3 thousand miles per year. In a Florida town, the average of 42 residents is found to be 9.8 thousand miles per year with a standard deviation of 5.8 thousand miles. It is claimed that the driving habits of these residents are different from the rest of the country. Is this claim supported at the 2% level of significance? Assume a normal population. Use the P-value method.