Question

The city of Gainesville is trying to determine the average price for a gallon of gas. They randomly sampled 28 gas stations and found the sample mean to be $2.58 with a standard deviation of $0.09. Assume that all of the assumptions are met. Calculate a 95% confidence interval for the population mean gas price in Gainesville.

Answer 1

The 95% confidence interval for the population mean gas price in Gainesville is between $2.54 and $2.62.

Explanation:

We have the standard deviation of the sample, so we use the t-distribution to solve this question.

The first step to solve this problem is finding how many degrees of freedom, we have. This is the sample size subtracted by 1. So

df = 28 - 1 = 27

95% confidence interval

Now, we have to find a value of T, which is found looking at the t table, with 27 degrees of freedom(y-axis) and a confidence level of
`1 - (1 - 0.95)/(2) = 0.975`. So we have T = 2.0.52

The margin of error is:

`M = T(s)/(√(n)) = 2.052(0.09)/(√(27)) = 0.04`

In which s is the standard deviation of the sample and n is the size of the sample.

The lower end of the interval is the sample mean subtracted by M. So it is $2.58 - $0.04 = $2.54

The upper end of the interval is the sample mean added to M. So it is $2.58 + $0.04 = $2.62.

The 95% confidence interval for the population mean gas price in Gainesville is between $2.54 and $2.62.