Data were collected on the amount spent by 64 customers for lunch at a major Houston restaurant.

These data are contained in the file named Houston. Based upon past studies the
population standard deviation is known with σ = $6.
a. At 99% confidence, what is the margin of error?
b. Develop a 99% confidence interval estimate of the mean amount spent for lunch.

Amount
20.50
14.63
23.77
29.96
29.49
32.70
9.20
20.89
28.87
15.78
18.16
12.16
11.22
16.43
17.66
9.59
18.89
19.88
23.11
20.11
20.34
20.08
30.36
21.79
21.18
19.22
34.13
27.49
36.55
18.37
32.27
12.63
25.53
27.71
33.81
21.79
19.16
26.35
20.01
26.85
13.63
17.22
13.17
20.12
22.11
22.47
20.36
35.47 Amount
11.85
17.88 Mean 21.52
6.83 Standard E 0.861105
30.99 Median 20.43
14.62 Mode 21.79
18.38 Standard D 6.888841
26.85 Sample Var 47.45612
25.10 Kurtosis -0.479698
27.55 Skewness 0.187752
25.87 Range 29.72
14.37 Minimum 6.83
15.61 Maximum 36.55
26.46 Sum 1377.28
24.24 Count 64
16.66 Confidence 1.720781
20.85
The Wall Street Journal reported that automobile crashes cost the United States $162 billion
annually (The Wall Street Journal, March 5, 2008). 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?

1599
8. Studies show that massage therapy has a variety of health benefits and it is not too expensive
(The Wall Street Journal, March 13, 2012). 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 assumptions about the population should we be willing to make if a margin of
error is desired?
b. Using 95% confidence, what is the margin of error?
c. Using 99% confidence, what is the margin of error?
Playbill magazine reported that the mean annual household income of its readers is
$119,155 (Playbill, January 2006). Assume this estimate of the mean annual household income
is based on a sample of 80 households, and based on past studies, the population standard
deviation is known to be σ= $30,000.

119155
80

30000

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

b. Develop a 95% confidence interval estimate of the population mean.
c. Develop a 99% confidence interval estimate of the population mean.
d. Discuss what happens to the width of the confidence interval as the confidence level
is increased. Does this result seem reasonable? Explain.
A sample containing years to maturity and yield for 40 corporate bonds are contained in
the data file named CorporateBonds (Barron’s, April 2, 2012).
a. What is the sample mean years to maturity for corporate bonds and what is the sample
standard deviation?
b. Develop a 95% confidence interval for the population mean years to maturity.
c. What is the sample mean yield on corporate bonds and what is the sample standard
deviation?
d. Develop a 95% confidence interval for the population mean yield on corporate
bonds.

CompanyYears to Yield
HSBC 12.00 4.079
GS 9.75 5.367
C 4.75 3.332
MS 9.25 5.798
C 9.75 4.414 Years to Maturity
TOTAL 5.00 2.069
MS 5.00 4.739 Mean
WFC 10.00 3.682 Standard Error
TOTAL 10.00 3.270 Median
TOTAL 3.25 1.748 Mode
BAC 9.75 4.949 Standard Deviation
RABOBK 9.75 4.203 Sample Variance
GS 9.25 5.365 Kurtosis
AXP 5.00 2.181 Skewness
MTNA 5.00 4.366 Range
MTNA 10.00 6.046 Minimum
JPM 4.25 2.310 Maximum
GE 26.00 5.130 Sum
LNC 10.00 4.163 Count
BAC 5.00 3.699 Confidence Level(95.0%)
FCX 10.00 4.030
GS 25.50 6.913
RABOBK 4.75 2.805
GE 26.75 5.138
HCN 7.00 4.184
GE 9.50 3.778
VOD 5.00 1.855
NEM 10.00 3.866
GE 1.00 0.767
C 25.75 8.204
SHBASS 5.00 2.861
PAA 10.25 3.856
GS 3.75 3.558
TOTAL 1.75 1.378
MS 4.00 4.413
WFC 1.25 0.797
AIG 5.00 3.452
BAC 29.75 5.903
MS 1.00 1.816
T 28.50 4.930
contained in

is the sample

Yield

9.70625 Mean 3.88535

1.26183142680767 Standard E 0.25605
9.25 Median 3.948
5 Mode #N/A
7.98052266378459 Standard D 1.619403
63.6887419871795 Sample Var 2.622465
1.18066035948417 Kurtosis 0.280773
1.47067799559914 Skewness 0.172759
28.75 Range 7.437
1 Minimum 0.767
29.75 Maximum 8.204
388.25 Sum 155.414
40 Count 40
2.55229496962091 Confidence 0.51791
The International Air Transport Association surveys business travelers to develop quality
ratings for transatlantic gateway airports. The maximum possible rating is 10. Suppose a
simple random sample of 50 business travelers is selected and each traveler is asked to provide
a rating for the Miami International Airport. The ratings obtained from the sample of
50 business travelers follow.
Develop a 95% confidence interval estimate of the population mean rating for Miami
Rating
6
4
6
8
7
7
6
3
3
8
10
4
8
7
8
7
5
9
5
8
4
3
8
5
5
4
4
4
8
4
5
6
2
5
9
9
 8
4
8
9
9
5
9
7
8
3
10
8
9
6