2. The average expenditure for a family of four to visit an amusement park overs

Question

2. The average expenditure for a family of four to visit an amusement park overseas is 98 US dollars. In January, Newsweek ran a feature article on the sharp decline of profitability within the American amusement park business. Among various reasons cited for the decline in profit was a reference to an abstract of a special study. This study tracked a random sample of 25 families of four that attended amusement parks and showed their average expenditure (for a full day visit) was of $193.32 with a standard deviation of $26.73.

A. Please construct a 95% confidence interval of the mean cost for a family of four to spend the day at an American amusement park.

B. How does your estimate compare to the cost associated with visiting an amusement park overseas?

Explanation / Answer

mu = average expenditure for a family of four to visit an amusement park overseas = 98

n = 25

x bar = sample mean = 193.32

s = sample std dev = 26.73

For 95% z alpha/2 = 1.96

Margin of error = 1.96(26.73) = ±10.48

Hence Conf interval = 193.32±10.48

= ( 182.84 , 203.8)

B) The mean 98 is not in this confidence interval

Hence sample mean is very much higher than 98

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