How much is the cost of a hospital stay increasing? The mean cost of one day in a semiprivate room was reported to be $4848 in 2005 and $5260 in 2006 (The Wall Street Journal, January 2, 2007). Assume the estimate for 2005 is a sample mean based on a sample size of 80 and the estimate for 2006 is a sample mean based on a sample size of 60.
a. Develop a point estimate of the increase in the cost of a semiprivate hospital room from 2005 to 2006.
b. Historical data indicate that a population standard deviation of $800 is a reasonable assumption for both years. Compute the margin of error for your estimate in part (a). Use 95% confidence.
c. Develop a 95% confidence interval estimate of the increase in cost for a semiprivate room.