1.Health care expenditures represent an increasingly large portion of the economy. Currently health care expenditures are growing past 20% of GDP. Part of the increase in expenditures relates to the choices patients make about the type of care they receive. For example, C-section deliveries are more expensive than vaginal deliveries, yet C-section deliveries are becoming more common.
The Center for Disease Control and Prevention estimate that 32.8% of all deliveries are C-Section. Using a sample of 643 observations from the Health Care Cost and Utilization project, test the hypothesis that the proportion of C-section births is equal to 32.8%.
2.In auditing public companies' financial statements, auditors test internal controls over financial reporting to make sure they are operating effectively. In an audit of Xelom Electronics Company, you are assigned to audit internal controls of the sales and collection cycle. One internal control you are assigned to test is the control that sales over $10,000 have a manager's approval. You examine a sample of 100 sales transactions over $10,000 to see if there is management approval. Your audit team has decided that if the proportion of sales transactions over $10,000 in the sample that does not have management approval is 5% or less, then the control is considered to be operating effectively. Test the hypothesis that the proportion of the sample where the control was not operating effectively was 5% or less. In other words, test that the proportion of transactions over $10,000 that do not have management approval was 5% or less. Use an α = 0.05. Based upon you test, is the control operating effectively?
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