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1. An insurance company is reviewing its current policy rates.

When originally setting the rates they believed that the average claim amount was $1,800. They are concerned that the true mean is actually higher than this, because they could potentially lose a lot of money. They randomly select 40 claims, and calculate a sample mean of $1,950. Assuming that the standard deviation of claims is $500, and set the level of significance to 0.05, test to see if the insurance company should be concerned.

2. A sample of 40 sales receipts from a grocery store has x= $137 and standard deviation = $30.2. Use these values to test whether or not the mean is sales at the grocery store are different from $150.

3. A random sample of 100 recorded deaths in the United States during the past year showed an average life span of 71.8 years. Assuming a population standard deviation of 8.9 years, does this seem to indicate that the mean life span today is greater than 70 years? Use a 0.05 level of significance.

4. A manufacturer of sports equipment has developed a new synthetic fishing line that he claims has a mean breaking strength of 8 kilograms with a standard deviation of 0.5 kilogram. Test the hypothesis that u = 8 kilograms against the alternative that u 8 kilograms if a random sample of 50 lines is tested and found to have a mean breaking strength of 7.8 kilograms. Use a 0.01 level of significance.

5. It is claimed that an automobile is driven on the average more than 20,000 kilometers per year. To test this claim, a random sample of 100 automobile owners are asked to keep a record of the kilometers they travel. Would you agree with this claim if the random sample showed an average of 23,500 kilometers and the standard deviation is 3900 kilometer? Use a 0.05 level of significance.

6. A coin is tossed 20 times, resulting in 5 heads. Is this sufficient evidence to reject the hypothesis that the coin is balanced in favor of the alternative that heads occur less than 50% of the time?

7. In a winter of an epidemic flu, 2000 babies were surveyed by a well known, pharmaceutical company to determine if the companys new medicine was effective after two days. Among 120 babies who had the flu and were given the medicine, 29 were cured within two days. Among 280 babies who had the flu but were not given the medicine, 56 were cured within two days. Is there any significant indication that supports the companys claim of the effectiveness of the medicine?

8. In a controlled laboratory experiment, scientists at the University of Minnesota discovered that 25% of a certain strain of rats subjected to a 20% coffee bean diet and then force-fed a powerful cancer-causing chemical later developed cancerous tumor. Would we have reason to believe that the proportion of rats developing tumors when subjected to this diet has increased if the experiment were repeated and 16 of 48 rats develop tumors? Use a 0.05 level of significance.