In: Statistics and Probability
CONSTRUCT A 90% CONFIDENCE INTERVAL OF THE AVERAGE GASOLINE PRICE PER GALLON BASED ON A RECENT SAMPLE OF 48 STATIONS. THE SAMPLE MEAN WAS $2.63. ASSUME THE POPULATION STANDARD DEVIATION IS $0.31.
Solution :
Given that,
Point estimate = sample mean = = 2.63
Population standard deviation =
= 0.31
Sample size = n =48
At 90% confidence level the z is
= 1 - 90% = 1 - 0.90 = 0.1
/ 2 = 0.1 / 2 = 0.05
Z/2 = Z0.05 = 1.645 ( Using z table )
Margin of error = E = Z/2
* (
/n)
= 1.645 * (0.31 / 48
)
= 0.07
At 90% confidence interval mean
is,
- E <
<
+ E
2.63 - 0.07 <
< 2.63 + 0.07
(2.56 , 2.70)