An analyst from an energy research institute in California wishes to precisely e

Question

An analyst from an energy research institute in California wishes to precisely estimate the 99% confidence interval for the average price of unleaded gasoline in the state. In particular, she does not want the sample mean to deviate from the population mean by more than $0.08. What is the minimum number of gas stations that she should include in her sample if she uses the standard deviation estimate of $0.40, as reported in the popular press? Use Table 1. (Round intermediate calculations to 4 decimal places and "z-value" to 3 decimal places. Round up your answer to the nearest whole number.)

Explanation / Answer

SD = 0.40

Margin of error = 0.08

Thus,

M = z-crit * SD / sqrt(n)

Thus,

sqrt (n ) = 2.5758 * 0.40 / 0.08

= 12.8791

thus,

n = 165.87

Thus, 166 gas stations are required.

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