An insurancecompany states that 85% of its claims are settled within 5weeks. A c

Question

An insurancecompany states that 85% of its claims are settled within 5weeks. A consumer group selected a random sample of 50 of thecompany’s claims and found 21 of the claims were settledwithin 5 weeks. Is there enough evidence to support the consumergroup’s claim that fewer than 85% of the claims were settledwithin 5 weeks? Test using the traditional approach with = 0.02.
·        State the null and alternatehypotheses
·        Calculate the sampleproportion
·        Determine which test statisticapplies, and calculate it
·        Determine the criticalvalue(s).
·        State your decision: Should the nullhypothesis be rejected?

Explanation / Answer

The test hypothesis is Ho:p=0.85 (null hypothesis) Ha:p

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