Homework SourseAn analyst from an energy research institute in California w
An analyst from an energy research institute in California wishes to precisely estimate a 96% confidence interval for the average price of unleaded gasoline in the state. In particular, she does not want the sample mean to deviate from the population mean by more than $0.05. What is the minimum number of gas stations that she should include in her sample if she uses the standard deviation estimate of $0.22, as reported in the popular press? Use http://lectures.mhhe.com/connect/0077639472/Table/table1.jpg
| An analyst from an energy research institute in California wishes to precisely estimate a 96% confidence interval for the average price of unleaded gasoline in the state. In particular, she does not want the sample mean to deviate from the population mean by more than $0.05. What is the minimum number of gas stations that she should include in her sample if she uses the standard deviation estimate of $0.22, as reported in the popular press? Use http://lectures.mhhe.com/connect/0077639472/Table/table1.jpg |
Solution
Compute Sample Size
n = (Z a/2 * S.D / ME ) ^2
Z/2 at 0.04% LOS is = 2.05 ( From Standard Normal Table )
Standard Deviation ( S.D) = 0.22
ME =0.05
n = ( 2.05*0.22/0.05) ^2
= (0.451/0.05 ) ^2
= 81.36 ~ 82
