## Related questions with answers

An insurance company is thinking about offering discounts on its life insurance policies to nonsmokers. As part of its analysis, the company randomly selects 200 men who are 60 years old and asks them whether they smoke at least one pack of cigarettes per day and if they have ever suffered from heart disease. (2 = Suffer from heart disease, 1 = Do not suffer from heart disease).. Can the company conclude at the 10% significance level that smokers have a higher incidence of heart disease than nonsmokers?

Solution

VerifiedWe need to compare the populations of the 60 year old men. The given data are nominal data. With this information, we can test the difference between the two population proportions ($p_x - p_y$).

Since we want to compare the proportion of the two populations, we should use the $Z$ - test because the sampling distribution of $\hat{p_x} - \hat{p_y}$ is approximately normally distributed.

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