You want to estimate the average gas price in your city for a litre of regular unleaded gasoline with 95% confidence.You believe that the standard deviation of prices is $0.05.If you wish to achieve a margin of error no larger than $0.02,how many gas stations should you sample?

Question

Quizplus · Accepted Answer

To find the sample size (n), use the formula for margin of error: ME = Z * (σ/√n). For 95% confidence, Z is approximately 1.96. Set ME to $0.02 and σ to $0.05, then solve for n: 0.02 = 1.96 * (0.05/√n). Solving gives n ≈ 24.01, so round up to 27.

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