Exhibit 16.3 Stella would like to determine the amount of the average purchase at her software store with a total precision of $10,a historical average purchase variance of $150,and at a 95% confidence level.
Refer to Exhibit 16.3.If Stella wishes to increase the total precision to $5,what sample size is needed?
A)8
B)54
C)48
D)96
E)24

Question

Quizplus · Accepted Answer

To determine the sample size needed for a desired precision, the formula n = (Z^2 * σ^2) / E^2 is used, where Z is the Z-score for the confidence level (1.96 for 95%), σ^2 is the variance, and E is the desired precision. For a precision of $5, n = (1.96^2 * 150) / 5^2 = 96.