Question

Americans have become increasingly concerned about the rising cost of Medicare. In 1990, the average annual Medicare spending per enrollee was $3267; in 2003, the average annual Medicare spending per enrollee was $6883. Suppose you hired a consulting firm to take a sample of fifty 2003 Medicare enrollees to further investigate the nature of expenditures. Assume the population standard deviation for 2003 was $2000

Question: What is the probability the sample mean will be greater than $7500? If the consulting firm tells you the sample mean for the Medicare enrollees, they interviewed was $7500, would you question whether they followed correct simple random sampling procedures? Why or why not?

Answer 1

Since above probability is less than 0.05 so it is unusual to get the sample mean greater than $7500. So it seems that they did not follow correct simple random sampling procedures