You are interested in purchasing a new car. One of the many points you wish to consider is the resale value of the car after 5 years. Since you are particularly interested in a certain foreign sedan, you decide to estimate the resale value of this car with a 90% confidence interval. You manage to obtain data on 17 recently resold 5-year-old foreign sedans of the same model. These 17 cars were resold at an average price of $12,320 with a standard deviation of $600. Suppose that the interval is calculated to be ($12,065.92, $12,574.08). How could we alter the sample size and the confidence coefficient in order to guarantee a decrease in the width of the interval?
A) Increase the sample size but decrease the confidence coefficient.
B) Increase the sample size and increase the confidence coefficient.
C) Keep the sample size the same but increase the confidence coefficient.
D) Decrease the sample size but increase the confidence coefficient.

Question

Quizplus · Accepted Answer

Increasing the sample size reduces the standard error, which narrows the confidence interval. Decreasing the confidence coefficient (confidence level) also narrows the interval, as it reduces the range needed to capture the true mean with the specified confidence.

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