Question 3 An insurance company is budgeting the premium rates for the following year

Question 3 An insurance company is budgeting the premium rates for the following year. The company decided the rates of the year before based on the average amount they paid as insurance claims, $1000. However, the manager believes that the actual amount of claims that they pay is higher. Thus, they should increase the insurance premium. The manager took a sample of 50 claims, and found the average mean claim of $1,200, with the standard deviation of $500.

a. At 0.05 level of significance, use the critical value approach to assist the manager in taking the decision if the average insurance claim of the population is more than $1,000.

b. At the 0.05 level of significance, use the p-value approach to assist the manager in taking the decision if the average insurance claim of the population is more than $1,000.

c. Interpret the meaning of the p-value in (b). d. Compare your conclusions in (a) and (b).