Suppose you are interested in estimating your sales for this holiday season but

Question

Suppose you are interested in estimating your sales for this holiday season but this time you're introducing a completely new line of products. Therefore, your standard deviation from previous seasons does not apply. You must use a t-distribution to estimate our margin of error. Suppose you survey 25 customers to estimate how much in sales you will make. The standard deviation of your sample is $75 and it has a mean of $700. At a confidence level of 99%, what is the margin of error? (You will need to reference the table used in this week's topic notes or employ the correct command in Excel to answer this question.) Express your answer without the dollar sign ($) and to three decimal places.

Explanation / Answer

n = 25
mean = 700
std. dev. = 75
For 99% Confidence level with 24 degrees of freedom
t - value = 2.797

Margin of error = t * std. dev. / sqrt(n)
ME = 2.797 * 75/sqrt(25) = 41.955

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