probability of cost in medicare

gastonj

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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.

c. What is the probability the sample mean will be greater that $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?
 
gastonj said:
:?
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.

c. What is the probability the sample mean will be greater that $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?

What are yor thoughts - work?
 
I know I need to find out what z is. Is it 7500-6883/5.53? I don't know how to set it up?
 
gastonj said:
I know I need to find out what z is. Is it 7500-6883/5.53? I don't know how to set it up?
First, fix your notation. This 7500-6883/5.53 does not mean what you want. Use parentheses.

Second, have you ever seen an example of a Test of Hypothesis? It is a little trick, but only because it doesn't feel like you are doing anything. Get over that and you'll do fine. Find an example or check list for "Test of Hypothesis". Show us your steps and we can direct you along your path.
 
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