Question

She presents the results of the computation in part (a) to the marketing department head, who thinks the sample size is too large. She suggests that survey results in the past have suggested that 85% of shoppers would prefer this type of shopping. If the survey costs $15 per person, how much money can be saved by using the 85% estimate to determine the sample size?   

Answer 1

Answer:

Given that,

She presents the results of the computation in part (a) to the marketing department head, who thinks the sample size is too large.

She suggests that survey results in the past have suggested that 85% of shoppers would prefer this type of shopping.

If the survey costs $15 per person.

How much money can be saved by using the 85% estimate to determine the sample size:

Here we have,

ME= 0.04,  , CL=0.9

Level of significance: =0.1

Critical Value of Z is =1.64

Required sample size is:

Hence, the required sample size is 215.

Excel function for critical value : NORMSINV(1-(0.1/2))

Survey cost of part a is 423 $15=$6345

Survey cost of part b is 215 $15=$3225

That is survey cost is reduce by $6345-$3225=$3120 using given estimate.