An Insurance Company Sets Up a Statistical Test with a Null

question 105

Multiple Choice

An insurance company sets up a statistical test with a null hypothesis that the average time for processing a claim is 4 days, and an alternative hypothesis that the average time for processing a claim is greater than 4 days. After completing the statistical test, it is concluded that the average time exceeds 4 days. However, it is eventually learned that the mean process time is really 4 days. What type of error occurred in the statistical test?

• A) Type I error
• B) Type II error
• C) Type III error
• D) No error occurred in the statistical sense.

---

Definitions:

Consumer Price Index

An index that measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Food and Beverage

This refers to the industry that encompasses the preparation, distribution, and service of food and drink products.

CPI

An index measuring the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Consumer Price Index

An index measuring the change over time in the price level of a market basket of consumer goods and services purchased by households.