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A Health Insurer Has Determined That the "Reasonable and Customary H0:μ=$1200Ha:μ>$1200\begin{array}{l}\mathrm{H}_{0}: \mu=\$ 1200 \\\mathrm{H}_{\mathrm{a}}: \mu>\$ 1200\end{array}

Question 23

Multiple Choice

A health insurer has determined that the "reasonable and customary" fee for a certain medical procedure is $1200. They suspect that the average fee charged by one particular clinic for this procedure is higher than $1200. The insurer wants to perform a hypothesis test to determine whether their suspicion is correct. The hypotheses are: H0:μ=$1200Ha:μ>$1200\begin{array}{l}\mathrm{H}_{0}: \mu=\$ 1200 \\\mathrm{H}_{\mathrm{a}}: \mu>\$ 1200\end{array}
Explain the meaning of a correct decision.


A) Concluding that μ>$1200 \mu>\$ 1200 when in fact μ=$1200 \mu=\$ 1200
B) Concluding that μ<$1200 \mu<\$ 1200 when in fact μ<$1200 \mu<\$ 1200
C) Failing to reject the hypothesis that μ=$1200 \mu=\$ 1200 when in fact μ>$1200 \mu>\$ 1200
D) Failing to reject the hypothesis that μ=$1200 \mu=\$ 1200 when in fact μ=$1200 \mu=\$ 1200 OR concluding that μ> \mu> $1200 \$ 1200 when in fact μ>$1200 \mu>\$ 1200

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