Answer:
We conclude that the mean cost-to-charge ratio for Oregon hospitals is lower for outpatient care than for inpatient care.
Step-by-step explanation:W
We are given with the cost-to-charge ratios for both inpatient and outpatient care in 2002 for a sample of six hospitals in Oregon below;
Hospital 2002 Inpatient Ratio 2002 Outpatient Ratio
1 68 54
2 100 75
3 71 53
4 74 56
5 100 74
6 83 71
Let
= <u><em>mean cost-to-charge ratio for outpatient care</em></u>
= <u><em>mean cost-to-charge ratio for impatient care</em></u>.
SO, Null Hypothesis,
:
{means that the mean cost-to-charge ratio for Oregon hospitals is higher or equal for outpatient care than for inpatient care}
Alternate Hypothesis,
:
{means that the mean cost-to-charge ratio for Oregon hospitals is lower for outpatient care than for inpatient care}
The test statistics that would be used here is <u>Two-sample t-test statistics</u> because we don't know about population standard deviations;
T.S. =
~ 
where,
= sample mean cost-to-charge Outpatient Ratio =
= 63.83
= sample mean cost-to-charge Impatient Ratio =
= 82.67
= sample standard deviation for Outpatient Ratio =
= 10.53
= sample standard deviation for Impatient Ratio =
= 14.33
= sample of hospital for outpatient care = 6
= sample of hospital for outpatient care = 6
Also,
=
= 12.574
So, <u><em>the test statistics</em></u> =
~ 
= -2.595
The value of t test statistics is -2.595.
<u>Now, at 5% significance level, the t table gives critical value of -1.812 at 10 degree of freedom for left-tailed test.</u>
Since, our test statistics is less than the critical value of t as -2.595 < -1.812, so we have sufficient evidence to reject our null hypothesis as it will fall in the rejection region due to which <u><em>we reject our null hypothesis</em></u>.
Therefore, we conclude that the mean cost-to-charge ratio for Oregon hospitals is lower for outpatient care than for inpatient care.