Gasoline Prices.The U.S. Energy Information Administration (US EIA) reported that the average price for a gallon of regular gasoline is $2.94. The US EIA updates its estimates of average gas prices on a weekly basis. 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 each of the following margins of error at 95% confidence.a.The desired margin of error is $.10.b.The desired margin of error is $.07.c.The desired margin of error is $.05.

Respuesta :

Answer:

a) Sample size of 96 or higher

b) Sample size of 196 or higher

c) Sample size of 385 or higher

Step-by-step explanation:

We have that to find our [tex]\alpha[/tex] level, that is the subtraction of 1 by the confidence interval divided by 2. So:

[tex]\alpha = \frac{1-0.95}{2} = 0.025[/tex]

Now, we have to find z in the Ztable as such z has a pvalue of [tex]1-\alpha[/tex].

So it is z with a pvalue of [tex]1-0.025 = 0.975[/tex], so [tex]z = 1.96[/tex]

Now, find the margin of error M as such

[tex]M = z*\frac{\sigma}{\sqrt{n}}[/tex]

In which [tex]\sigma[/tex] is the standard deviation of the population and n is the size of the sample.

In this problem, [tex]\sigma = 0.25[/tex]

a.The desired margin of error is $.10.

Sample size of n or higher when [tex]M = 0.1[/tex]. So

[tex]M = z*\frac{\sigma}{\sqrt{n}}[/tex]

[tex]0.1 = 1.96*\frac{0.5}{\sqrt{n}}[/tex]

[tex]0.1\sqrt{n} = 1.96*0.5[/tex]

[tex]\sqrt{n} = \frac{1.96*0.5}{0.1}[/tex]

[tex]\sqrt{n} = 9.8[/tex]

[tex]\sqrt{n}^{2} = (9.8)^{2}[/tex]

[tex]n = 96[/tex]

b.The desired margin of error is $.07.

Sample size of n or higher when [tex]M = 0.07[/tex]. So

[tex]M = z*\frac{\sigma}{\sqrt{n}}[/tex]

[tex]0.07 = 1.96*\frac{0.5}{\sqrt{n}}[/tex]

[tex]0.07\sqrt{n} = 1.96*0.5[/tex]

[tex]\sqrt{n} = \frac{1.96*0.5}{0.07}[/tex]

[tex]\sqrt{n} = 14[/tex]

[tex]\sqrt{n}^{2} = (14)^{2}[/tex]

[tex]n = 196[/tex]

c.The desired margin of error is $.05.

Sample size of n or higher when [tex]M = 0.05[/tex]. So

[tex]M = z*\frac{\sigma}{\sqrt{n}}[/tex]

[tex]0.05 = 1.96*\frac{0.5}{\sqrt{n}}[/tex]

[tex]0.05\sqrt{n} = 1.96*0.5[/tex]

[tex]\sqrt{n} = \frac{1.96*0.5}{0.05}[/tex]

[tex]\sqrt{n} = 19.6[/tex]

[tex]\sqrt{n}^{2} = (19.6)^{2}[/tex]

[tex]n = 384.1[/tex]

Rounding up, sample size of 385 or higher

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