Question

. Following are prices of a random sample of 18 smart TVs sold at a particular department store with screen sizes between 46’’ and 50’’. Find the 90% confidence interval for the true mean price of a smart TV purchased at this store. Assume the prices are normally distributed. 448 498 597 599 649 699 529 749 628 950 798 369 498 669 499 599 355 469

Answer 1

`589-1.740(151.305)/(√(18))=526.946`

`589+1.740(151.305)/(√(18))=651.054`

So on this case the 90% confidence interval would be given by (526.946;651.054)

Explanation:

Previous concepts

A confidence interval is "a range of values that’s likely to include a population value with a certain degree of confidence. It is often expressed a % whereby a population means lies between an upper and lower interval".

The margin of error is the range of values below and above the sample statistic in a confidence interval.

Normal distribution, is a "probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean".

`\bar X` represent the sample mean for the sample

`\mu` population mean (variable of interest)

s represent the sample standard deviation

n represent the sample size

Solution to the problem

The confidence interval for the mean is given by the following formula:

`\bar X \pm t_(\alpha/2)(s)/(√(n))` (1)

In order to calculate the mean and the sample deviation we can use the following formulas:

`\bar X= \sum_(i=1)^n (x_i)/(n)` (2)

`s=\sqrt{(\sum_(i=1)^n (x_i-\bar X))/(n-1)}` (3)

The mean calculated for this case is
`\bar X=589`

The sample deviation calculated
`s=151.305`

In order to calculate the critical value
`t_(\alpha/2)` we need to find first the degrees of freedom, given by:

`df=n-1=18-1=17`

Since the Confidence is 0.90 or 90%, the value of
`\alpha=0.1` and
`\alpha/2 =0.05`, and we can use excel, a calculator or a table to find the critical value. The excel command would be: "=-T.INV(0.05,17)".And we see that
`t_(\alpha/2)=1.740`

Now we have everything in order to replace into formula (1):

`589-1.740(151.305)/(√(18))=526.946`

`589+1.740(151.305)/(√(18))=651.054`

So on this case the 90% confidence interval would be given by (526.946;651.054)