A survey is planned to determine the mean annual family medical expenses of empl

Question

A survey is planned to determine the mean annual family medical expenses of employees of a large company. The management of the company wishes to be 95% confident that the sample mean is correct to within i S60 of the population mean annual family medical expenses. A previous study indicates that the standard deviation is approximately $326. a. How large a sample is necessary? b. If management wants to be correct to within t$20, how many employees need to be selected? Click here to view page 1 of the cumulative standardized normal distribution table Click here to view page 2 of the cumulative standardized normal distribution table. a. How large a sample is necessary? n (Round up to the nearest integer

Explanation / Answer

a. Here it is given that sd=326 and E=60. Also z=1.96

As we know formula for E=z*sd/sqrt(n)

So n=(z*sd/E)^2=(1.96*326/60)^2=113

b. Here E=20

Putting same in formula of n, n=(z*sd/E)^2=(1.96*326/20)^2=1021

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