Question

A department store manager wants to estimate with a 99% confidence interval the mean amount spent by all customers at the store. How large of a sample should be taken if the manager is willing to tolerate an error of $3. Assume the population standard deviation is $31.

Answer 1

Solution :

Given that,

standard deviation =s =   =31

Margin of error = E = 3

At 99% confidence level the z is,

= 1 - 99%

= 1 - 0.99 = 0.01

/2 = 0.005

Z/2 = 2.576

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

n = ( 2.576* 31 / 3 )2

n =708.55

n=709