Question

In a study of 794 randomly selected medical malpractice​ lawsuits, it was found that 482 of them were dropped or dismissed. Use a 0.05 significance level to test the claim that most medical malpractice lawsuits are dropped or dismissed.

Answer 1

Solution

Null hypothesis H0 : There is no difference between proportions of dropped lawsuits and lawsuits that go to trial, p = 0.5

Alternate hypothesis H1 : There is significant difference between proportions out of 794 lawsuits, 482 were either dropped or dismissed, p >0.5

n = 794

sample p = 482/794 = 0.6071

Z = (sample p - p)/((p)(1-p)/n))^0.5 = (0.6071-0.5)/((0.5)(0.5)/794)^0.5 = 6.0357

z critical value = 1.6449

reject the null hypothesis hence we can conclude that most medical malpractice lawsuits are dropped or dismissed.