The average cost per night of a hotel room in New York City

The average cost per night of a hotel room in New York City is $273 (SmartMoney, March 2009). Assume this estimate is based on a sample of 45 hotels and that the sample standard deviation is $65.

Question: Two years ago the average cost of a hotel room in New York City was $229. Discuss

the change in cost over the two-year period.

$75

$20

$44

$90

Solution

Margin of error = (1.96)(SD) / sqrt(45) = (1.96)(65) / sqrt(45) =18.99

Try using the t-critical value with 45-1 = 44 degrees of freedom (with 95% confidence) = 2.021
(2.021)(65) / sqrt(45) = 19.58 = approx 20