Chapter 8:
7. A survey of small businesses with Web sites found that the average amount spent on a
site was $11,500 per year (Fortune, March 5, 2001). Given a sample of 60 businesses and
a population standard deviation of σ = $4000, what is the margin of error? Use 95%
confidence. What would you recommend if the study required a margin of error of $500?
Sample size: n=60
Population standard deviation: σ = 4000
Confidence level: 95% → Zα/2 = 1.96
Margin of Error:
=> Margin of Error ≈ $1,012
Recommendation if Margin of Error = $500
=> n = 246
14. A simple random sample with n = 54 provided a sample mean of 22.5 and a sample
standard deviation of 4.4.
a. Develop a 90% confidence interval for the population mean.
b. Develop a 95% confidence interval for the population mean.
c. Develop a 99% confidence interval for the population mean.
d. What happens to the margin of error and the confidence interval as the confidence
level is increased?
Sample size: n=54
Sample mean: xˉ=22.5
Sample standard deviation: s=4.4
d. Effect of Increasing Confidence Level
As the confidence level increases:
The critical value tα/2 increases
The margin of error increases
The confidence interval becomes wider
18. Thirty fast-food restaurants including Wendy’s, McDonald’s, and Burger King were
visited during the summer of 2000 (The Cincinnati Enquirer, July 9, 2000). During each
visit, the customer went to the drive-through and ordered a basic meal such as “combo”
meal or a sandwich, fries, and shake. The time between pulling up to the menu board and
receiving the filled order was recorded. The times in minutes for the 30 visits are as follows:
0.9 1.0 1.2 2.2 1.9 3.6 2.8 5.2 1.8 2.1
6.8 1.3 3.0 4.5 2.8 2.3 2.7 5.7 4.8 3.5
2.6 3.3 5.0 4.0 7.2 9.1 2.8 3.6 7.3 9.0
a. Provide a point estimate of the population mean drive-through time at fast-food
restaurants.
b. At 95% confidence, what is the margin of error?
c. What is the 95% confidence interval estimate of the population mean?
d. Discuss skewness that may be present in this population. What suggestion would you
make for a repeat of this study?
Given: n=30
d. Skewness and Recommendation
The data show some relatively large values (such as 7.2, 7.3, 9.0, 9.1), indicating positive
(right) skewness.
Recommendation:
A repeat study should consider using a larger sample size and possibly report the median
in addition to the mean to better represent the data distribution.
29. The travel-to-work time for residents of the 15 largest cities in the United States is
reported in the 2003 Information Please Almanac. Suppose that a preliminary simple
random sample of residents of San Francisco is used to develop a planning value of 6.25
minutes for the population standard deviation.
a. If we want to estimate the population mean travel-to-work time for San Francisco
residents with a margin of error of 2 minutes, what sample size should be used? Assume
95% confidence.
b. If we want to estimate the population mean travel-to-work time for San Francisco
residents with a margin of error of 1minute, what sample size should be used? Assume
95% confidence.
Planning value of standard deviation: σ=6.25
Confidence level: 95% → Zα/2=1.96
a. Margin of Error = 2 minutes
b. Margin of Error = 1 minute
34. At 95% confidence, how large a sample should be taken to obtain a margin of error of
.03 for the estimation of a population proportion? Assume that past data are not available
for developing a planning value for p*.
Confidence level: 95% → Zα/2=1.96
Margin of error: E=0.03E = 0.03
No prior estimate of p → use p∗=0.5
Round up: n=1068
36. According to statistics reported on CNBC, a surprising number of motor vehicles are
not covered by insurance (CNBC, February 23, 2006). Sample results, consistent with the
CNBC report, showed 46 of 200 vehicles were not covered by insurance.
a. What is the point estimate of the proportion of vehicles not covered by insurance?
b. Develop a 95% confidence interval for the population proportion.
Sample size: n=200
Number of vehicles not insured: x=46
a. Point Estimate of the Population Proportion:
b. 95% Confidence Interval:
39. The percentage of people not covered by health care insurance in 2003 was 15.6%
(Statistical Abstract of the United States, 2006). A congressional committee has been
charged with conducting a sample survey to obtain more current information.
a. What sample size would you recommend if the committee’s goal is to estimate the cur-
rent proportion of individuals without health care insurance with a margin of error of .03?
Use a 95% confidence level.
b. Repeat part (a) using a 99% confidence level.
Planning value: p∗=0.156-p* =0.844
Round up: n = 563
Round up: n = 971