suppose that in a large city the annual income is normally distributed with a standard devation of $7,500.  A random sample of 16 real state agents reveals that the mean annual income is $52,000.  Determine the 98% confidence interval estimate of the mean annual income of all real state agents in teh city.
in Statistics Answers by

Your answer

Your name to display (optional):
Privacy: Your email address will only be used for sending these notifications.
Anti-spam verification:
To avoid this verification in future, please log in or register.

1 Answer

For a large sample size we would use the Z score (2.326) corresponding to a two-tail probability of 98%. This would give us an interval corresponding to 98% of all annual incomes of real estate agents (realtors). It would tell us where we would expect 98% of the annual incomes to be in the whole population of these agents’ annual incomes.

But the sample size is small and the number of degrees of freedom (dof) is 16-1=15, so we use the t-distribution for this dof to find out for this sample what the spread would be expected to be. The t value for 98% (2-tail) is 2.602. The extreme limits for this confidence interval is given by (X-52000)/7500=2.602, from which X-52000=19515, giving us the extremes $32485 and $71515, the interval [$32485,$71515], $52000±$19515, or $32,485<X<$71,515, where X represents the annual income.

(This compares to the same interval in the whole population of such annual incomes of $34,555<X<$69,445.)

by Top Rated User (1.2m points)

Related questions

1 answer
asked Oct 22, 2013 in Other Math Topics by donthaniel Keith | 912 views
1 answer
asked Jun 25, 2013 in Greatest Common Factor by anonymous | 1.4k views
0 answers
asked Sep 10, 2012 in Algebra 1 Answers by anonymous | 616 views
1 answer
asked Sep 23, 2021 by Hattie | 316 views
0 answers
1 answer
1 answer
1 answer
asked Jan 29, 2015 in Statistics Answers by VLanham Level 1 User (420 points) | 1.3k views
Welcome to MathHomeworkAnswers.org, where students, teachers and math enthusiasts can ask and answer any math question. Get help and answers to any math problem including algebra, trigonometry, geometry, calculus, trigonometry, fractions, solving expression, simplifying expressions and more. Get answers to math questions. Help is always 100% free!
87,516 questions
100,279 answers
2,420 comments
732,287 users