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More on insurance An insurance company claims that in the entire population of
Chapter 7, Problem 63(choose chapter or problem)
More on insurance An insurance company claims that in the entire population of homeowners, the mean annual loss from fire is \(\mu=\$ 250\) and the standard deviation of the loss is \(\sigma=\$ 1000\). The distribution of losses is strongly right-skewed: many policies have $0 loss, but a few have large losses. An auditor examines a random sample of 10,000 of the company’s policies. If the company’s claim is correct, what’s the probability that the average loss from fire in the sample is no greater than $275? Show your work.
Questions & Answers
QUESTION:
More on insurance An insurance company claims that in the entire population of homeowners, the mean annual loss from fire is \(\mu=\$ 250\) and the standard deviation of the loss is \(\sigma=\$ 1000\). The distribution of losses is strongly right-skewed: many policies have $0 loss, but a few have large losses. An auditor examines a random sample of 10,000 of the company’s policies. If the company’s claim is correct, what’s the probability that the average loss from fire in the sample is no greater than $275? Show your work.
ANSWER:Step 1 of 2
From the question given that :
The central limit theorem states that if the sample size is 30 or more, then the sampling distribution of the sample mean is approximately normal with mean 
