TUTORIAL QUESTIONS—CONFIDENCE INTERVAL AND SAMPLE SIZE

DETERMINATION

1. A random sample of 15 stocks traded on the NASDAQ market showed an average of 21500
shares traded. From past experience, it is believed that the population standard deviation of
shares traded is 195000 and the shares traded are very closed to a normal distribution. Construct
a 99% confidence interval for the average shares traded on the NASDAQ market. Interpret your
result.

2. In a random sample of 525 Penn State World Campus students the mean height was 67.009
inches with a standard deviation of 4.462 inches. The standard error was computed to be 0.195.
Construct a 95% confidence interval for the mean height of all Penn State World Campus
students.

3. A sample of 12th grade females was surveyed about their seatbelt usage. A 95% confidence
interval for the proportion of all 12th grade females who always wear their seatbelt was
computed to be [0.612, 0.668].

Research question: Is there evidence that the proportion of all 12th grade females who
always wear their seatbelt is different from 0.65?

The value of 0.65 is contained within our confidence interval. This means that 0.65 is a
reasonable value of the population proportion. We cannot conclude that the population
proportion is different from 0.65.

4. A random sample of 50 students at one school was obtained and each selected student was
given an IQ test. These data were used to construct a 95% confidence interval of [96.656,
106.422].

Research question: Is there evidence that the mean IQ score at this school is different from
the known national average of 100?

The 95% confidence interval contains 100. This means that 100 is a reasonable estimate for the
mean IQ score of students at this school. There is not evidence that the mean at this school is
different from 100.

5. A sample of 50 Duke students were asked how many long-term exclusive relationships they
have had. The sample yielded a mean of 3.2 and a standard deviation of 1.74. Estimate the true
average number of exclusive relationships using this sample.

6. A simple random sample of 50 items resulted in a sample mean of 32 and a sample standard
deviation of 6.
a) Provide a 90% confidence interval for the population mean
 b) Provide a 95% confidence interval for the population mean
c) Provide a 99% confidence interval for the population mean

7. In a survey conducted in Koforidua, 246 respondents out of 300 reported that they had
exclusive use of fixed bath or shower with a hot water supply. Calculate a 99% confidence
interval for the population proportion or percentage.
8. A local real estate company, Sanaa Construction Limited (SCL), wants to understand the
housing market in the Jachie/Pramso area. The company hires you to do some analysis. Suppose
that you have collected information on the selling price of 138 houses that are randomly selected
from recent transactions. You compute the sample mean of these prices to be
¢540,792.8 and the sample standard deviation to be s = ¢180,642.3.
i. Based on the above data, compute 95% confidence interval for the mean housing price in
Jachie/Pramso area.
Suppose you show this confidence interval to the Marketing Manager in the real estate company,
who then asks what the confidence interval REALLY means. Give a precise explanation of the
meaning of the confidence interval. In particular, what does it mean to say you are 95%
confident? Be as precise as possible.

Sample Size
1. What sample size is needed to be 90% confident of being correct within ± 5? A pilot study
suggested that the standard deviation is 45.

2. An auditor is faced with a population of 1000 vouchers and wishes to estimate the total value
of the population of vouchers. A sample of 50 vouchers is selected with the average voucher
amount of $1076.39, standard deviation of $273.62. Set up the 95% confidence interval estimate
of the total amount for the population of vouchers.

3. Annual starting salary for college graduates with Business Administration degrees are believed
to have a standard deviation of approximately $2000. Assume that a 95% confidence interval
estimate for the mean annual starting salary is desired. How large a sample should be taken if the
margin error is?
 $500
 $200
 $100