Scan Medical Insurance

Large Sample Estimation.?

Q: Increasing medical costs have created a financial crisis among insurance companies that provide medical benefit programs to major corps. In an attempt to measure the costs of medical benefits to its employees, the personnel manager of a cali-based manufacturing comp randomly surveyed the records of n=64 employees and recorded the medical insurance claims by each chosen employee for the previous 12 months. The result of this survey revealed an average total claim of 964$ with a standard deviation of 147$. Estimate mu, the average annual medical claim per employee, and place a 95% bound on the error of estimation.

Public Comments

1. I believe this a confidence interval problem. You have to use the following formula: X ± 1.96*σ/√n 964 ± 1.96 * 147/√64 (927.985, 10000.015)