A local retail company wants to estimate the mean amount spent. Their budget limits the number of surveys to 225. What is their maximum error of the estimated mean amount spent for a 99% level of confidence and an estimated standard deviation of $10.00?
A) $10
B) $1.00
C) 1%
D) $1.72

Question

Quizplus · Accepted Answer

We can use the formula:
Margin of error = Z*(standard deviation / sqrt(sample size))
where Z is the z-score corresponding to the level of confidence (99% in this case), which is 2.58.

Plugging in the values:
Margin of error = 2.58*(10 / sqrt(225))
Margin of error ≈ 1.72

Therefore, the maximum error of the estimated mean amount spent is $1.72.

Option D is the correct choice.

A Local Retail Company Wants to Estimate the Mean Amount