Question

An entrepreneur wants to open an appliance repair shop. She would like to know what the average home repair bill is, including the charge for the service call for appliance repair in the area. She wants the estimate to be within $16  of the actual figure. She believes the standard deviation to be approximately $141.50. How large a sample should the entrepreneur take if she wants to be 95% confident of the results?

Answer 1

Solution :

Given that,

Population standard deviation = = $ 141.50

Margin of error = E = $ 16

At 95% confidence level the z is,

= 1 - 95%

= 1 - 0.95 = 0.05

/2 = 0.025

Z/2 = Z0.025 = 1.96  

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

n = [1.96 * 141.50 / 16]2

n = 300.45

Sample size = n = 301