The life insurance industry maintains that the average worker
in Saskatoon has no more than $25,000...
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The life insurance industry maintains that the average workerin Saskatoon has no more than $25,000 of personal lifeinsurance. You believe this to be toolow. You sample 100 workers in Saskatoon at random andfind the sample average to be $26,650 of personal lifeinsurance. The population standard deviation is known tobe $12,000. Use ?=0.05 throughout.
(6) Test your belief using a significance level of 5%.
(6) Explain, in the context of this question, whatis meant by a Type I error, a Type II error, and the power of thetest?
(5) If the true average for this population is infact $30,000, what is the probability of committing a Type IIerror?
(1) Calculate the power of the test.
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