Americans have become increasingly concerned about the rising cost of Medicare. In 1990, the average annual Medicare spending per enrollee was $3267; in 2003, the average annual Medicare spending per enrollee was $6883 (Money, Fall 2003). Suppose you hired a consulting firm to take a sample of fifty 2003 Medicare enrollees to further investigate the nature of expenditures. Assume the population standard deviation for 2003 was $2,100.
Calculate the standard error of the mean amount of Medicare spending for a sample of fifty 2003 enrollees (to 2 decimals).
What is the probability the sample mean will be within +/- $300 of the population mean (to 4 decimals)?
What is the probability the sample mean will be greater than $7500 (to 4 decimals)?
If the consulting firm tells you the sample mean for the Medicare enrollees it interviewed was $7500, would you question whether the firm followed correct simple random sampling procedures?
1. yes because the probability of attain the sample mean is very high
2.Yes because the probabilty of attaining the sample mean is very low
3. No because the probability of attaining the sample mean is very high
4. Yes because the probability of attaining the sample mean is very low