# Question

According to the Kaiser Family Foundation, U.S. workers who had employer-provided health insurance paid an average premium of $921 for single (one person) health insurance coverage during 2011 (USA TODAY, October 10, 2011). Suppose that a recent random sample of 100 workers with employer provided health insurance selected from a large city paid an average premium of $946 for single health insurance coverage. Assume that such premiums paid by all such workers in this city have a standard deviation of $110.

a. Using the critical-value approach and a 1% significance level, can you conclude that the current average such premium paid by all such workers in this city is different from $921?

b. Using the critical-value approach and a 2.5% significance level, can you conclude that the current average such premium paid by all such workers in this city is higher than $921?

c. What is the Type I error in parts a and b? What is the probability of making this error in each of parts a and b?

d. Calculate the p-value for the test of part a. What is your conclusion if α = .01?

e. Calculate the p-value for the test of part b. What is your conclusion if α = .025?

a. Using the critical-value approach and a 1% significance level, can you conclude that the current average such premium paid by all such workers in this city is different from $921?

b. Using the critical-value approach and a 2.5% significance level, can you conclude that the current average such premium paid by all such workers in this city is higher than $921?

c. What is the Type I error in parts a and b? What is the probability of making this error in each of parts a and b?

d. Calculate the p-value for the test of part a. What is your conclusion if α = .01?

e. Calculate the p-value for the test of part b. What is your conclusion if α = .025?

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