In order to set a competitive price, the owner for the HertzRent a Car Agency wa

Question

In order to set a competitive price, the owner for the HertzRent a Car Agency wants to know the average mileage driven by thecustomers who rent cars. (Hertz currently applies the unlimitedmileage policy.) A random sample of 29 customers is obtained. Thesample mean mileage is 325 miles and the sample standard deviationis 60. A) Construct the 95% confidence interval for the mean mileagedriven by Hertz customers. B) What is the possible price range that you could suggest tothe owner of Hertz? (on the average, each mile costs 5 cents to thecompany.) C) What happens to the price range if you choose99%-confidence interval? I have this problem started below but am currently stuck,detailed assistance is greatly appreciated. :o)

Explanation / Answer

Given n=29, xbar=325, s=60 (a) =0.05, |Z(0.025)|=1.96 (check normal table) The 95% CI is xbar ± Z*s/n --> 325 ± 1.96*60/sqrt(29) --> (303.16, 346.84) (c) =0.01, |Z(0.005)|=2.58 (check normal table) The 95% CI is xbar ± Z*s/n --> 325 ± 2.58*60/sqrt(29) --> ( 296.25, 353.74)

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