You are interested in purchasing a new car. One thng you wish to consider is the

Question

You are interested in purchasing a new car. One thng you wish to consider is the resale value after 5 years. You decide to estimate the resale value of this car with a 98% CL You manage to obtain data on 17 resold 5-year-old cars. These 17 cars were resold at an average price of $12,530 with a standard deviation of $700. The interval calculated is ($12,091.47, $12,968.53). How could you alter the sample size and the confidence coefficient in order to guarantee a decrease in the width of the interval? A. Increase the sample size and increase the confidence coefficient. B. Increase the sample size and decrease the confidence coefficient. ° C. Decrease the sample size but increase the confidence coefficient. D. Keep the sample size the same but increase the confidence coefficient.

Explanation / Answer

The correct option is B

Explantion:

if you increase the sample size n, you lower the margin of error and make the confidence interval more narrow. If you lower the confidence level, say from 98% to 95%, t* gets smaller, and so the margin of error decreases, making the confidence interval more narrow.

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