Multiple Choice
Consider the following to answer the question(s) below:
Insurance companies track life expectancy information to assist in determining the cost of life insurance policies. Last year the average life expectancy of all policyholders was 77 years. ABI Insurance wants to determine if their clients now have a longer life expectancy, on average, so they randomly sample some of their recently paid policies. The insurance company will only change their premium structure if there is evidence that people who buy their policies are living longer than before. The sample has a mean of 78.6 years and a standard deviation of 4.48 years.
-A Type II error in this context would be
A) failing to detect that the average life expectancy has increased, when in fact it has.
B) failing to detect that the average life expectancy has increased, when in fact it is unchanged.
C) detecting that the average life expectancy has increased, when in fact it hasn't.
D) failing to detect that the average life expectancy is unchanged.
E) detecting that the average life expectancy is unchanged.
Correct Answer:

Verified
Correct Answer:
Verified
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