How many standard errors is below a value

Reference no: EM13119064

A health insurer wants to know if having a nurse available to answer some simple questions over a telephone hotline could cut costs by eliminating unnecessary doctor visits. Past records show the yearly average cost of doctor visits per family is typically around $900 with an SD of $200. They randomly select 100 families, give them access to the hotline, and record the yearly costs of their doctors visits. In this sample, they find the average yearly cost per family to be $850. 1.)How many Standard Errors is $850 below $900? 2.) If we want to test the null hypothesis that the hotline does not reduce costs, what would be the conclusion based on this data?

a) There is not enough evidence based on this data so we conclude the hotline does not reduce costs.
b) There is enough evidence so we reject the null hypothesis and conclude the hotline does reduce costs.

Reference no: EM13119064

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