An auto insurance company suspect that recently the average cost of vehicle repairs per accident has increased from the average past cost of $3,800. A sample of 20 accident cases yielded sample mean...

An auto insurance company suspect that recently the average cost of vehicle repairs per accident has increased from the average past cost of $3,800. A sample of 20 accident cases yielded sample mean cost of $4,065 and standard deviation of $214. Test the hypothesis to confirm the suspicion at ? = 0.01. Assume that the repairing cost follows normal distribution.

(a) Solve the problem using classical approach. You must state the null and the alternative hypotheses.