It is well known that car buyers often add accessories to their new cars. A sample of 179 Ottawa purchasers yielded a sample mean of $5000 worth of accessories added to the purchase above the base sticker price. Suppose the cost of accessories purchased for all Ottawa has a standard deviation of $1500. (a) Calculate a 95% confidence interval for the average cost of accessories on Ottawa. – Section Break - (b) Determine the margin of error in estimating the average cost of accessories on Ottawa. (c) What sample size would be required to reduce the margin of error by 50%?

It is well known that car buyers often add accessories to their new cars. A sample of 179 Ottawa purchasers yielded a sample mean of $5000 worth of accessories added to the purchase above the base sticker price. Suppose the cost of accessories purchased for all Ottawa has a standard deviation of $1500. (a) Calculate a 95% confidence interval for the average cost of accessories on Ottawa. – Section Break - (b) Determine the margin of error in estimating the average cost of accessories on Ottawa. (c) What sample size would be required to reduce the margin of error by 50%?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Hypothesis Testing

In statistics, there are two ways to calculate the sample data. One is descriptive statistics and the other is inferential statistics. In descriptive statistics, all of the information is defined through graphs and charts. In inferential statistics, it allows one to test the hypothesis and it is always used to predict the data. Inferential statistics has two main areas: estimating parameters and hypothesis testing. A hypothesis is a statement about the unknown parameter of the population which we want to verify from the information available from the sample. The premise may or may not be true. The estimation of the whole population would be a reasonable way of deciding if the statistical hypothesis is valid. There are two types of hypotheses. They are null hypothesis and alternative hypothesis.

Question

7. It is well known that car buyers often add accessories to their new cars. A sample of 179
Ottawa purchasers yielded a sample mean of $5000 worth of accessories added to the purchase
above the base sticker price. Suppose the cost of accessories purchased for all Ottawa has a
standard deviation of $1500.
(a) Calculate a 95% confidence interval for the average cost of accessories on Ottawa.
- Section Break -
(b) Determine the margin of error in estimating the average cost of accessories on Ottawa.
(c) What sample size would be required to reduce the margin of error by 50%?

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