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  3. the life insurance industry maintains that the ave

The life insurance industry maintains that the average worker in Saskatoon has no more than $25,000...

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Basic Math

  1. 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.
  1. (6) Test your belief using a significance level of 5%.
  2. (6)  Explain, in the context of this question, whatis meant by a Type I error, a Type II error, and the power of thetest?
  3. (5)  If the true average for this population is infact $30,000, what is the probability of committing a Type IIerror?  
  4. (1) Calculate the power of the test.

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