Question

12 dollars.

Question 1. How large a sample should she take to estimate the mean amount spent to within 2 dollars with 99% confidence? (Round your answer up to the next largest integer).

Answer 1

Solution :

Given that,

standard deviation = =$12

Margin of error = E = $2

At 99% confidence level the z is,

= 1 - 99%

= 1 - 0.99 = 0.01

/2 = 0.005

Z/2 = 2.58 ( Using z table ( see the 0.005 value in standard normal (z) table corresponding z value is 2.58 )  

sample size = n = [Z/2* / E] 2

n = ( 2.58* 12 / 2 )2

n =239.63

Sample size = n =240