You want to obtain a sample to estimate how much parents spend
on their kids birthday parties. Based on previous study, you
believe the population standard deviation is approximately σ=76.1
dollars. You would like to be 98% confident that your estimate is
within 1.5 dollar(s) of average spending on the birthday parties.
How many parents do you have to sample?
Solution :
Given that,
standard deviation = =76.1
Margin of error = E = 1.5
At 98% confidence level the z is ,
= 1 - 98% = 1 - 0.98 = 0.02
/ 2 = 0.02/ 2 = 0.01
Z/2 = Z0.01 = 2.326 ( Using z table )
sample size = n = [Z/2* / E] 2
n = ( 2.326*76.1 /1.5 )2
n =13925.35
Sample size = n =13926
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