Elementary Statistics (12th Edition)

Published by Pearson
ISBN 10: 0321836960
ISBN 13: 978-0-32183-696-0

Chapter 7 - Estimates and Sample Sizes - 7-3 Estimating a Population Mean - Basic Skills and Concepts: 11

Answer

μ is between 3315 and 22481.

Work Step by Step

$\alpha=1-0.95=0.05.$ $\sigma$ is not known, hence we use the t-distribution with $df=sample \ size-1=5-1=4$ in the table. $t_{\alpha/2}=t_{0.025}=2.776.$ Margin of error:$t_{\alpha/2}\cdot\frac{s}{\sqrt {n}}=2.775\cdot\frac{7719}{\sqrt{5}}=9583.$ Hence the confidence interval:$\mu$ is between 12898-9583=3315 and 12898+9583=22481. The data set has an outlier of 0.001 dollars.
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