An important issue facing Americans is the large number of medicalmalpractice la

Question

An important issue facing Americans is the large number of medicalmalpractice lawsuits and the expenses that they generate. In astudy of 1228 randomly selected medical malpractice lawsuits, it isfound that 856 of them were later dropped or dismissed (based ondata from the Physician Insurers Association of America). Constructa 99% confidence interval estimate of the proportion of medicalmalpractice lawsuits that are dropped or dismissed. Does it appearthat the majority of such suits are dropped or dismissed?

Explanation / Answer

p_hat = 856 / 1228 = .6971 SE = sqrt(p_hat * (1 - p_hat) / n) = sqrt(.6971 * (1-.6971) / 1228)= .0131 99% --> z = 2.33 CI = p_hat ± z*SE = .6971 ± 2.33 * .0131 = .6971± .0305

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