Q5 A car insurance agent was concerned about losing customers to an online compe

Question

Q5 A car insurance agent was concerned about losing customers to an online competitor. To investigate, he randomly selected profiles (type of car, coverage, driving record, etc.) for 7 of his clients and checked online price quotes for their policies. The comparisons are shown to the right. His statistical software produced the displayed summaries (where PriceDiffequals=Localminus? Online). At first, the insurance agent wondered whether there was some kind of mistake in this output. He thought the Pythagorean Theorem of Statistics should work for finding the standard deviation of the

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Q5 A car insurance agent was concerned about losing customers to an online competitor. To investigate, he randomly selected profiles (type of car, coverage, driving record, etc.) for 7 of his clients and checked online price quotes for their policies. The comparisons are shown to the right. His statistical software produced the displayed summaries (where PriceDiffequals=Localminus? Online). At first, the insurance agent wondered whether there was some kind of mistake in this output. He thought the Pythagorean Theorem of Statistics should work for finding the standard deviation of the

PLEASE DON'T ANSWER IF YOU ARE 100%. No need for bad rating

Explanation / Answer

It is

OPTION D: Adding variances requires that the variables be independent. These price quotes are for the same cars, so they are paired. [ANSWER]

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To get the standard deviation of the differences, we really have to get it the differences, then get their standard deviation. It's not the same for independent samples, where we add the variances.

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