Human Resource Consulting (HRC) surveyed a random sample of 53Twin Cities construction companies to find information on the costsof their health care plans. One of the items being tracked is theannual deductible that employees must pay. The Minnesota Departmentof Labor reports that historically the mean deductible amount peremployee is $501 with a standard deviation of $102.

1. Point vs. Interval Estimation

Here you will discuss the importance of constructing confidenceintervals for the population mean. You want to be sure to addressthese questions:

• What are confidence intervals?
• What is a point estimate?
• What is the best point estimate for the population mean?Explain why it is the best.
• Why do we need confidence intervals?

2. Mean Estimation

First clearly give the best point estimate for the populationmean the data was drawn from. Next you will construct twoconfidence intervals: a 95% confidence intervaland a 99% confidence interval. Bear in mind thatthe population standard deviation is unknown, butyou may assume that the population is approximately normallydistributed. Please show your work for the construction of theseconfidence intervals. If you used technology or a calculator pleaseexplain what you used and how you got your intervals.

3. Interpretation and Conclusion

Compare and contrast your findings for the 95% and 99%confidence intervals. Did you notice any changes in your intervalestimate? Be specific. What conclusion(s) can be drawn about yourinterval estimates when the confidence level is increased? Explainwhy you draw this conclusion.