Question

A marketing specialist wants to estimate the average amount spent by visitors to an online retailer's newly-designed website. From the data in a preliminary study she guesses that the standard deviation of the amount spent is about 14 dollars.

Question 1. How large a sample should she take to estimate the mean amount spent to within 6 dollars with 95% confidence? (Round your answer up to the next largest integer).

Answer 1

Given ME = 6, = 14, = 0.05

The Zcritical at = 0.05 is 1.96

The ME is given by :

Squaring both sides we get: (ME)² = (Z critical)² * ² / n

Therefore n = (Zcritical * / ME)² = (1.96 * 14 / 6)² = 20.92

Therefore n = 21 (Taking it to the next whole number)