The Wall Street Journal reported that automobile crashes cost the United States

Question

The Wall Street Journal reported that automobile crashes cost the United States $162 billion annually (The Wall Street Journal, March 5, 2008). The average cost per person for crashes in the Tampa, Florida, area was reported to be $1599. Suppose this average cost was based on a sample of 39 persons who had been involved in car crashes and that the population standard deviation is ? = $700.

What is the margin of error for a 95% confidence interval? Round your answer to two decimal places.

What would you recommend if the study required a margin of error of $150 or less?

Explanation / Answer

z(0.975) = 1.96

margin of error = 1.96*700/sqrt(39) = 219.69

for margin of error to e $150 or less let size =n

150=1.96*700/sqrt(n)

n = 84

sample size should be increased to 84 or more

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