Used cars are sold through a variety of outlets including fr

Used cars are sold through a variety of outlets, including franchise and independent car dealers, rental car companies, leasing offices, auctions, and private party sales. There is not only a variety of cars, but a range of prices. This project takes into consideration these prices. At the Alpha = 0.025 level of significance, we test the claim that the mean price of a used car is less than $9000 and the standard deviation of the price of a used car is greater than $5000. If you wanted to be 97% confident that you were in error by at most $500, how many used cars would you need to randomly selected? Construct a 95% confidence interval for the mean price of used cars. You must show me your random sample of 500 or more of used cars including the population (at least 3000 used cars) from which the sample was drawn. The SRS must be free from any outliers (unusual prices). Narrow you search to price range: $5000- $10000

Solution

error = 500 = z * 5000 / sqrt (n)
so, z-score for 97% confidence = 1.880794

so, n = 353.74 = 354...

95% confidence interval = [ 9000 - ( 1.96 * 5000 / sqrt( 3000) ) , 9000 + ( 1.96 * 5000 / sqrt( 3000) )
= [ 8821.077 , 9178.923 ] ( assuming N = populaion =3000)