# Basic Statistics Timed Question 8. Need in 50 Minutes!

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Question description

### Question 8

A health insurer wants to know if having a nurse available to answer 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 around \$875 with an SD of \$300. They randomly select 225 families, give them access to the hotline, and record the yearly costs of their doctor visits. In this sample, they find the average yearly cost per family to be \$840.

We want to test the null hypothesis that the hotline does not reduce costs, that is, average cost is \$875. What would be the conclusion based on this data?

There is enough evidence to reject the null hypothesis, so we conclude that the hotline reduces costs.

There is not enough evidence to reject the null hypothesis, so we conclude that the hotline does not reduce costs.

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