In 2002, the mean expenditure for auto insurance in a certain state was $806. An insurance salesperson in this state believes that the mean expenditure for auto insurance is less today. She obtains a simple random sample of 32 auto insurance policies and determines the mean expenditure to be $781 with a standard deviation of $39.13. Is there enough evidence to support the claim that the mean expenditure for auto insurance is less than the 2002 amount at the α = 0.05 level of significance?

No there is not enough evidence to support the claim that the mean expenditure for auto insurance is less than the 2002 amount at the α = 0.05 level of significance

Step-by-step explanation:

Sample Mean = μ1 = $806

Sample Mean = μ2 = $ 781

Standard Deviation= S= σ =39.13

n= 32

Confidence Interval = 95 %

α= 0.05

z∝=± 1.96

We state the null and alternative hypotheses as

H0: μ1 = $806 and Ha: μ1 ≠ $806 two sided tail test

z= μ1 -μ2/σ/√n

z= 806-781/ 39.13/√32

z= 806-781/ 39.13/5.6568

z=806-781/ 6.92

z= 25/6.92

z= 3.613

Z> z∝

3.613 > ± 1.96

No there is not enough evidence to support the claim that the mean expenditure for auto insurance is less than the 2002 amount at the α = 0.05 level of significance