An insurance company evaluates many variables about a person before deciding on an appropriate rate for automobile insurance. A representative from a local insurance agency selected a random sample of 15 insured drivers and recorded the amount of claims each made in the last 3 years. Based on this information, which of the following will you construct to learn about the mean amount of claims made by the company's customer?
A) Confidence interval estimate for the mean using the standard normal distribution
B) Confidence interval estimate for the mean using the Student's t distribution
C) Confidence interval estimate for the proportion using the standard normal distribution
D) Confidence interval estimate for the difference between two means using the standard normal distribution

Question

Quizplus · Accepted Answer

Since the sample size is less than 30, we should use the Student's t distribution to construct a confidence interval for the mean amount of claims made by the company's customers. A confidence interval estimate for the proportion or for the difference between two means would not be relevant in this scenario. Additionally, we cannot assume that the population standard deviation is known, so we should not use the standard normal distribution.

An Insurance Company Evaluates Many Variables About a Person Before