Question

Market research indicates that a new product has the potential to make the company an additional $1.6 million, with a standard deviation of $2.0 million. If this estimate was based on a sample of 8 customers, what would be the 95% confidence interval?

Answer #1

Confidence Interval for Population mean

Given,

Sample Size : n=8

Market research indicates that a new product has the potential to make the company an additional $1.6 million, with a standard deviation of $2.0 million

i.e Sample mean : : Average additional to the company = $1.6 million

Sample standard deviation : s = $2.0 million

Formula for Confidence Interval for Population mean when population Standard deviation is not known

Sample Mean : | 1.6 |

Sample Standard Deviation : s | 2 |

Sample Size : n | 8 |

Degrees of freedom : n-1 | 7 |

Confidence Level : | 95 |

0.05 | |

/2 | 0.025 |

2.3646 |

95% confidence interval

95% confidence interval : (-0.072,3.272)

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