Week 2.

Interval Estimation Solutions

Problem 1.
The National Football League (NFL) polls fans to develop a rating for each football
game. Each game is rated on a scale from 0 (forgettable) to 100 (memorable). The
fan ratings for a random sample of 12 games are shown.

57 61 86 74 72 73
20 57 80 79 83 74

a. Use a minitab to develop a point estimate of the mean fan rating for the
population of NFL games.
b. Use a minitab to develop a point estimate of the standard deviation of the
population of NFL games.
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Use Minitab descriptive statistics tool to find the mean and standard
deviation:

Statistics
Variabl N Mea SE StDe Minimu Media Maximu Skewnes
e N * n Mean v m Q1 n Q3 m s

C3 1 0 68.00 5.17 17.89 20.00 58.0 73.50 79.7 86.00 -1.92

2 0 5

Variable Kurtosis
C3 4.47

a) 68 b) 17.89
Chapter 8.

Problem 2.
The Wall Street Journal reported that economic cost of automobile crashes in Us
is about $871 billion annually (www.pbs.org 2014). The average cost per person
for crashes in the Tampa, Florida, area was reported to be $1599. Suppose this
average cost was based on a sample of 50 persons who had been involved in car
crashes and that the population standard deviation is σ =$600. What is the margin
of error for a 95% confidence interval? What would you recommend if the study
required a margin of error of $150 or less?
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Use One-sample Z analysis to calculate a 95% confidence interval or a margin of
error for a normal distribution with mean=1599, n = 50, and standard deviation =
600

Results
Sample Size Margin of Error
50 166.308

Descriptive Statistics
N Mean SE Mean 95% CI for μ
50 1599.0 84.9 (1432.7, 1765.3)
μ: mean of Sample
Known standard deviation = 600

95 % Confidence interval is (1432.7, 1765.3)

Use power and sample size tool under statistics.

Results
Margin Sample
of Error Size

150 62

Recommendation for a MOE = 150 – larger sample size

Problem 3.

Study shows that massage therapy has a variety of health benefits and it is not
too expensive (Mayo Clinic, Oct.2018). A sample of 10 typical one-hour massage
therapy sessions showed an average charge of $59. The population standard
deviation for a one hour session is σ =$5.50

a. What assumption about the population should we be willing to make if a

margin of error is desired?
b. Calculate the 95% confidence interval for the mean, what is the margin of
error?
c. Calculate the 99% confidence interval for the mean, what is the margin of
error?
d. Discuss the difference in the intervals and/or margins of error

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a) Because of the small sample size we need to assume that the
population is normally distributed.
b) Use Minitab one-sample Z tool to calculate the confidence interval

Descriptive Statistics
N Mean SE Mean 95% CI for μ
10 59.00 1.74 (55.59, 62.41)
μ: mean of Sample
Known standard deviation = 5.5

c)

Descriptive Statistics
N Mean SE Mean 99% CI for μ
10 59.00 1.74 (54.52, 63.48)
μ: mean of Sample
Known standard deviation = 5.5

d) Discussion during the review session.

Problem 4

Costs are rising for all kinds of medical care. The mean monthly rent at assisted-
living facilities in NY State was reported to have increased 17% over the last five
years to $4,185 (Genworth Financial Inc. 2018). Assume this cost estimate is
based on a sample of 120 facilities. From past studies, it can be assumed that the
population standard deviation is σ=$650

a. Develop a 90% confidence interval estimate of the population mean

monthly rent.
Descriptive Statistics
N Mean SE Mean 90% CI for μ
120 4185.0 59.3 (4087.4, 4282.6)

μ: mean of Sample
Known standard deviation = 650

b. Develop a 95% confidence interval estimate of the population mean

monthly rent.

Descriptive Statistics
N Mean SE Mean 95% CI for μ
120 4185.0 59.3 (4068.7, 4301.3)
μ: mean of Sample
Known standard deviation = 650

c. Develop a 99% confidence interval estimate of the population mean

monthly rent.
Descriptive Statistics
N Mean SE Mean 99% CI for μ
120 4185.0 59.3 (4032.2, 4337.8)

μ: mean of Sample
Known standard deviation = 650

d. Discuss what happens to the width of the confidence interval as the

confidence level is increased. Does this result seem reasonable? Explain.
Discussion during the review session.
Problem 5

Older people often have a hard time finding work. AARP reported on the number
of weeks it takes a worker aged 55 plus to find a job. The data on number of
weeks spent searching for a job contained in the file JobSearch are consistent
with the AARP findings (AARP Bulletin, March 2015).

a. Provide a point estimate of the population mean number of weeks it takes

a worker aged 55 plus to find a job.
Use Minitab descriptive statistics tool to find the mean of the data

Statistics
Variable N N* Mean SE Mean StDev Minimum Q1 Median Q3
Job Search Time (Weeks) 40 0 22.00 1.88 11.89 0.00 14.00 20.00 26.00
Variable Maximum Skewness Kurtosis
Job Search Time (Weeks) 52.00 1.01 0.90

b. What is the 95% confidence interval estimate of the mean and the value of
the margin of error?
Use One-sample t since the inferences are directly from the sample
Descriptive Statistics
N Mean StDev SE Mean 95% CI for μ
40 22.00 11.89 1.88 (18.20, 25.80)
μ: mean of Job Search Time (Weeks)

Results
Sample Size Margin of Error
40 3.80261

c. Discuss the degree of skewness found in the sample data. What suggestion
would you make for a repeat of this study?
The skewness measure is 1.01 which means that the data is skewed to the right.
What does it mean in the context of the problem? Discussion during the review
session.
Problem 6

The average cost per night of a hotel room in New York City is $273 (Statisitcs
Portal, October 2017). Assume this estimate is based on a sample of 45 hotels and
that the sample standard deviation is $65.
a. What is the 95% confidence interval estimate of the population mean and
the margin of error?

One –sample t

Descriptive Statistics
N Mean StDev SE Mean 95% CI for μ
45 273.00 65.00 9.69 (253.47, 292.53)
μ: mean of Sample

Results
Sample Size Margin of Error
45 19.5282

b. Two years ago the average cost of a hotel room in New York City was $254.
Discuss the change in cost over the two-year period.
Discussion during the review session
Problem 7

Consumption of alcoholic beverages by young women of drinking age has been

increasing in the United Kingdom, the United States, and Europe (NCBI, April
2015). Data (annual consumption in liters) consistent with the findings published
in the BMC Public Health report are shown for a sample of 20 European young
women (file: Alcohol).
266 82 199 174 97
170 222 115 130 169
164 102 113 171 0
93 0 93 110 130

Assuming the population is roughly symmetric, construct a 95% confidence

interval for the mean annual consumption of alcoholic beverages by
European young women.

1-sample t:

Descriptive Statistics
95% CI for
N Mean StDev SE Mean μ

20 130.0 65.4 14.6 (99.4, 160.6)

μ: mean of Annual Consumption (in liters)
Problem 8

The AAA reports daily the national gas price average (gasprices.aaa.com). On
March 8th 2019 the average price for a gallon of regular gasoline was $2.46.
Assume the standard deviation is $.25 for the price of a gallon of regular gasoline,
and recommend the appropriate sample size for the US EIA to use if they wish to
report the following margins of error at 95% confidence.

a. Suppose the desired margin of error is $.10.

Method

Parameter Mean
Distribution Normal
Standard deviation 0.25 (population value)
Confidence level 95%
Confidence interval Two-sided

Results
Margin Sample
of Error Size

0.1 25

b. Suppose the desired margin of error is $.07.

Results
Margin Sample
of Error Size

0.07 49

c. Suppose the desired margin of error is $.05.

Results
Margin Sample
of Error Size

0.05 97
Problem 9

An online survey by ShareBuilder, a retirement plan provider, and Harris

Interactive reported that 60% of female business owners are not confident they
are saving enough for retirement (SmallBiz, Winter 2006). Suppose we would like
to do a follow-up study to determine how much female business owners are
saving each year toward retirement and want to use $150 as the desired margin
of error for an interval estimate of the population mean. Use $1000 as a planning
value for the standard deviation and recommend a sample size for each of the
following situations.

a. A 90% confidence interval is desired for the mean amount saved.

Results
Margin Sample
of Error Size

150 121

b. A 95% confidence interval is desired for the mean amount saved.

Results
Margin Sample
of Error Size

150 171

c. A 99% confidence interval is desired for the mean amount saved.

Results
Margin Sample
of Error Size

150 295

d. When the desired margin of error is set, what happens to the sample size
as the confidence level is increased? Would you recommend using a 99%
confidence interval in this case? Discuss.

Discussion in class.