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Sample and Significance Level

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The president of the American Insurance Institute wants to compare the yearly costs of auto insurance offered by two leading companies. He selects a sample of 15 families, some with only a single insured driver, others with several teenage drivers, and pays each family a stipend to contact the two companies and ask for a price quote. To make the data comparable, certain features, such as the deductible amount and limits of liability, are standardized.

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Solution Summary

This solution contains step-by-step calculations to determine the significance level and difference in amounts quotes by conducting a hypothesis test. A null and alternative hypothesis is provided, calculations are made to determine the test statistic, and a comparison is made with the p-value. A decision is then made to accept or reject the null hypothesis.

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Chapter 11
page 397-401
Exercise 52 The president of the American Insurance Institute wants to compare the yearly costs of auto insurance offered by two leading companies. He selects a sample of 15 families, some with only a single insured driver, others with several teenage drivers, and pays each family a stipend to contact the two companies and ask for a price quote. To make the data comparable, certain features, such as the deductible amount ...

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