California insurance companies often study factors (e.g., the proximity to a maj
ID: 3124251 • Letter: C
Question
California insurance companies often study factors (e.g., the proximity to a major earthquake fault) that may influence homeowners' decisions to purchase earthquake insurance. Surveys were mailed to residents in three California counties to investigate the possible proximity effect. The data collected are shown below: Los Angeles County is the closest of the three to a major earthquake fault. Are homeowners in Los Angeles County more likely to purchase insurance than those in Santa Clara County? Use alpha = 0.05. (Optional) Are homeowners in Los Angeles County more likely to purchase insurance than those in San Bernardino County? Test using alpha = 0.05.Explanation / Answer
Here we have to compare the proportions of Los Angeles and Santa Clara first
H0: p1 = p2
Ha" p1 >p2
Right tailed test
Alpha = 0.05
p1 = 0.377= and p2 = 0.325
p1-p2 = 0.052
Z = p diff/std dev = 2.5485
pvalue =0.00539
As p <0.05 reject null hypothesis
Los angels have more proportion for insurance than Santa clara
------------------------------------------------
Now comparing Los Angles and San Bernardino
H0: p1 = p3
Ha" p1 >p3
Right tailed test
Alpha = 0.05
p1 = 0.377= and p2 = 0.335
p1-p2 = 0.052
Z = p diff/std dev = 2.1233
pvalue =0.017
As p <0.05 reject null hypothesis
Los angels have more proportion for insurance than San Bernardino
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.