Question

A large company that produces diabetes medications claims that American workers lose an average of $30 in pay each month to diabetes-related problems. A consumer advocacy group is a group that tries to make sure that everyday people are not being tricked into buying things they don’t need or buying things at unfair prices. The consumer advocacy group doesn’t believe the diabetes company – they believe that the amount lost is less than what the company claims.  It believes that the company just wants to sell more diabetes medication. The consumer advocacy group decided to study this problem and analyze it statistically.  Researchers at the consumer advocacy group took a random sample of 120 American workers. They found that these 120 people lost an average of $28 in wages each month with a standard deviation of $9.50.

Construct a 95% confidence interval.  Explain what your 95% confidence interval means about the loss of wages per month for American workers.  Based on the confidence interval limits, does the consumer advocacy group have statistical evidence to support their belief that the amount lost is less than what the company claims?  

Answer 1