Ford provides an option of a sunroof and side air bag packag

Ford provides an option of a sunroof and side air bag package for its Windstar model. This package costs$1400. Ford wants to determine the percentage of Windstar buyers who would pay $1400 extra for the sunroof and side air bags. How many Windstar buyers must be surveyed if we want to be 95% confident that the sample percentage is within four percentage points of the true percentage for all Windstar buyers?

Solution

Note that      
      
n = z(alpha/2)^2 p (1 - p) / E^2      
      
where      
      
alpha/2 =    0.025  
As there is no previous estimate for p, we set p = 0.5.      
      
Using a table/technology,      
      
z(alpha/2) =    1.959963985  
      
Also,      
      
E =    0.04  
p =    0.5  
      
Thus,      
      
n =    600.2279407  
      
Rounding up,      
      
n =    601   [ANSWER]