Motor Vehicle Insurance Appraisers Examine Cars That Have Been Involved

question 61

Essay

Motor vehicle insurance appraisers examine cars that have been involved in accidental collisions to assess the cost of repairs. An insurance executive is concerned that different appraisers produce significantly different assessments. In an experiment, 10 cars that had recently been involved in accidents were shown to two appraisers. Each assessed the estimated repair costs. The results are shown below. $$\begin{array} { | l | l | l | } \hline \text { Car } & \text { Appraiser 1 } & \text { Appraiser 2 } \\\hline 1 & 1650 & 1400 \\\hline 2 & 360 & 380 \\\hline 3 & 640 & 600 \\\hline 4 & 1010 & 920 \\\hline 5 & 890 & 930 \\\hline 6 & 750 & 650 \\\hline 7 & 440 & 410 \\\hline 8 & 1210 & 1080 \\\hline 9 & 520 & 480 \\\hline 10 & 690 & 770 \\\hline\end{array}$$ Can the executive conclude at the 5% significance level that the appraisers differ in their assessments?

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Definitions:

For-Profit Corporations

Businesses that are established to generate profit for their owners, with revenues exceeding costs.

Laws

The system of rules created and enforced through social or governmental institutions to regulate behavior.

Common Law

A body of legal principles that derives from court decisions over time rather than from statutes or constitutions, emphasizing precedent in judicial decisions.

Creditor

An individual or institution that lends money or extends credit to another party, known as the debtor.