Question

An Insurance Company reports that the mean cost to process claim is $50. An industry comparison showed this amount to be larger than most other insurance companies, so they instituted cost-cutting measures. To evaluate the effect of cost-cutting measure, the company selected a random sample of claims processed last month and determine the cost to process these selected claims. The sample information is reported as follows: 45, 48, 52, 58, 38, 42. At the 0.05 significance level is it reasonable to conclude that the mean cost to produce a claim is now less than $50? *

Answer 1

That is, there is insufficient evidence to conclude that the mean cost to produce a claim is now less than $50.