You are interested in purchasing a new car One of the many points you wish to co

Question

You are interested in purchasing a new car One of the many points you wish to consider is the resale value of the car atter 5 years. Since you are particularly interested in a certain foreign sedan, you decide to estimate the resale value o this car with a 90% confidence interval You manage to obtain data on 17 recently resold 5-year old foreign sedans of the same model These 17 cars were resold at an average price of $12 630 with a standard deviation of $800 Suppose that the interval is calculated to be ($12,291 23, $12,968.77). How could we aiter the sample size and the confidence coefficient in order to guarantee a increase in the width of the interval? Keep the sample size the same but increase the confidence coefficient Increase the sample size but decrease the contidence coeficent Increase the sample size and increase the confidence coefficient Decrease the sample size but increase the confidence coefficient

Explanation / Answer

CI = x ± t?/2 × (?/?n)

as seems from the above formula

CI is inversely proportional to ?n

so if we decrease the sample size,the width of interval increases

Also, from the formula

CI is directly proportional to confidence coefficient

Hence CI increases if confidence coefficient is increased

So the answer is choice D

Decrease the sample size but increase the confidence coefficient

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