An Insurance Company Sets Up a Statistical Test with a Null

question 28

Multiple Choice

An insurance company sets up a statistical test with a null hypothesis that the average time for processing a claim is 7 days, and an alternative hypothesis that the average time for processing a
Claim is greater than 7 days. After completing the statistical test, it is concluded that the average
Time exceeds 7 days. However, it is eventually learned that the mean process time is really 7 days.
What type of error occurred in the statistical test?

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

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Definitions:

Residual

The difference between observed values and the expected values in a statistical model, indicating the error or deviation from the predicted model outcome.

R Squared

A statistical measure of how close the data are to a fitted regression line, indicating the proportion of variance in the dependent variable explained by the independent variable(s).

Electricity Usage

The amount of electrical energy consumed by a household, organization, or area within a specific period.

Linear Model

A statistical model that assumes a linear relationship between the input variables (predictors) and a single output variable.