CH 07 Tif

Chapter 7: Estimating Population Values
CHAPTER 7
ESTIMATING POPULATION VALUES
TRUE/FALSE QUESTIONS
7-1 Point and Confidence Interval Estimates
1. Sampling error is the difference between a statistic computed from a sample and the corresponding
parameter computed from the population.
Answer: True (Easy)
Keywords: sampling error, statistic, parameter, sample
2. If a manager is attempting to estimate the mean amount spent per customer per visit at his store, the
sample mean would be the appropriate point estimate.
Answer: True (Easy)
Keywords: point estimate, sample
3. The product manager for a large retail store has recently stated that she estimates that the average
purchase per visit for the store’s customers is between $33.00 and $65.00. The $33.00 and the $65.00 are
considered point estimates for the true population mean.
Answer: False (Moderate)
Keywords: population, mean, sample, sampling error
4. A point estimate is just as likely to be higher than the population value as lower if the sampling is done
using a statistical sampling procedure.
Answer: True (Easy)
Keywords: point estimate, population, sample
5. A confidence interval will contain the true population value as long as the point estimate is within the
lower to upper limits.
Keywords: confidence interval, population, point estimate
6. A statement in the newspaper attributed to the leader of a local union stated that the average hourly
wage for union members in the region is $13.35. He indicated that this number came from a survey of
union members. If an estimate was developed with 95 percent confidence, we can safely conclude that
this value is within 95% of the true population mean hourly wage.
Keywords: confidence interval, population, survey
7. The wider the confidence interval, the more likely it is that the interval contains the true population
value.
Keywords: confidence interval, population
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8. A point estimate for the population mean will always fall within the confidence interval estimate.
Answer: True (Easy)
Keywords: point estimate, confidence interval, population
9. The fact that a point estimate will likely be different than the corresponding population value is due to
the fact that point estimates are subject to sampling error.
Answer: True (Easy)
Keywords: sampling error, point estimate, population
10. Samples selected using a random sampling procedure are always subject to less sampling error than
samples selected using a nonrandom sampling method.
Answer: False (Difficult)
Keywords: random, sampling error, nonrandom
11. If a population is skewed, the point estimate will be pushed to the right or left of the middle of the
confidence interval estimate.
Answer: False (Easy)
Keywords: confidence interval, point estimate, population, skewed
12. A 95% confidence interval estimate indicates that there is a 95 percent chance that the true population
value will fall within the range defined by the upper and lower limits.
Keywords: confidence interval, population
13. Recently, a marketing research company reported that, based on a random sample of 300 households,
the mean number of trips to a major shopping mall per month per household is 4.12 trips. This value is
referred to as a parameter and is subject to sampling error.
Keywords: parameter, sampling error, mean
14. A report in a consumer magazine indicated that with 90 percent confidence, the mean number of
hours that a particular brand light bulb lasts is between 900 and 1,100 hours. Based on this, the sample
mean that produced this estimate is 1,000 hours.
Answer: True (Moderate)
Keywords: sample, mean, estimate, confidence
15. A random sample of n= 49 tires were tested in a controlled situation. The mean miles that these tires
lasted before the tread reached a designated minimum level was 55,345. Suppose it is thought that the
population standard deviation for tire wear is 5,000 miles. Given this information, the upper limit of the
95 percent confidence interval estimate for tire wear is 55,545 miles.
Keywords: random sample, mean, standard deviation, confidence interval
16. In a situation where we know the population standard deviation, but wish to estimate the population
mean using a 90 percent confidence interval, the critical value is z = 1.645.
Keywords: confidence interval, population, mean, standard deviation, critical value
168
17. When developing a confidence interval estimate, the confidence level is calculated based on the size
of the sample and the population standard deviation.
Keywords: confidence interval, sample size, population, standard deviation
18. Based on the general format for a confidence interval, we can assume that the point estimate will be
at the center of the confidence interval estimate.
Keywords: point estimate, confidence interval
19. In a recent report to the supply chain manager in a major electronics company, the report writer stated
that with 90 percent confidence, the manufacturing lead time for a critical part is between 3.34 hours and
4.14 hours. Based on this, the sample mean that generated the confidence interval was 3.60.
Keywords: confidence interval, point estimate
20. In a recent report to the supply chain manager in a major electronics company, the report writer stated
that with 90 percent confidence, the manufacturing lead time for a critical part is between 3.34 hours and
4.14 hours. Based on this information, the margin of error for this estimate is + .80 hours.
Keywords: confidence interval, point estimate, margin of error
21. In developing a confidence interval estimate, the margin of error is directly dependent on the value of
the point estimate.
Keywords: confidence interval, margin of error, point estimate
22. Holding other things constant, when developing a confidence interval estimate for the population
mean, increasing the level of confidence will result in a larger margin of error.
Keywords: confidence interval, confidence level, margin of error
23. One way to reduce the margin of error in a confidence interval estimate is to lower the level of
confidence.
Keywords: margin of error, confidence interval
24. The standard deviation for the checking account balances is assumed known to be $357.50.
Recently, a bank manager was interested in estimating the mean balance. To do this, she selected a
random sample of 81 accounts and found a mean balance of $1,347.20. At a 95 percent confidence level,
the lower limit for the confidence interval is $646.50.
Keywords: standard deviation, confidence level, lower limit, mean
25. If we are interested in estimating the population mean based on a sample from a population for
which we know neither the mean nor the standard deviation, the critical value will be a t value from the t-
distribution.
Keywords: population, mean, standard deviation, estimate, critical value, t-distribution
169
26. If we are interested in estimating the population mean based on a sample of size 14 from a
population for which we know neither the mean nor the standard deviation, the critical value for a 90
percent confidence interval estimate will be 1.645.
Keywords: population, mean, standard deviation, estimate, critical value, t-distribution
27. Confidence intervals constructed with small samples tend to have greater margins of error than those
constructed from larger samples, all else being constant.
Answer: True (Easy)
Keywords: confidence interval, sample, margin of error
28. The bottlers of a new fruit juice daily select a random sample of 12 bottles of the drink to estimate
the mean quantity of juice in the bottles filled that day. On one such day, the following results were
observed: x  12.03 ; s = 0.12. Based on this information, the upper limit for a 95 percent confidence
interval estimate is approximately 12.106 ounces.
Keywords: confidence interval, upper limit, t-statistic
29. The bottlers of a new fruit juice daily select a random sample of 12 bottles of the drink to estimate
the mean quantity of juice in the bottles filled that day. On one such day, the following results were
observed: x  12.03 ; s = 0.12. Based on this information, the margin of error associated with a 90
percent confidence interval estimate for the population mean is 1.7959 ounces.
Keywords: margin of error, confidence interval, t-statistic
30. The makers of a weight loss product are interested in estimating the mean weight loss for users of
their product. To do this, they have selected a random sample of n = 9 people and have provided them
with a supply of the product. After six months, the nine people had an average weight loss of 15.3 pounds
with a standard deviation equal to 3.5 pounds. The margin of error for the 95 percent confidence interval
estimate is about 2.69 pounds.
Keywords: margin of error, confidence interval, t-statistic
31. The makers of weight loss product are interested in estimating the mean weight loss for users of their
product. To do this, they have selected a random sample of n = 9 people and have provided them with a
supply of the product. After six months, the nine people had an average weight loss of 15.3 pounds with a
standard deviation equal to 3.5 pounds. The upper limit for the 90 percent confidence interval estimate
for the population mean is approximately 17.47 pounds.
32. The t-distribution is used to obtain the critical value in developing a confidence interval when the
population distribution is not known and the sample size is small.
Keywords: t-distribution, critical value, confidence interval, sample size
33. The impact on the margin of error for a confidence interval for an increase in confidence level and a
decrease in sample size is unknown since these changes are contradictory.
Keywords: margin of error, confidence level, sample size
170
34. A 95 percent confidence interval estimate will have a margin of error that is approximately + 95
percent of the size of the population mean.
Keywords: confidence interval, margin of error
35. All other factors held constant, the higher the confidence level, the closer the point estimate for the
population mean will be to the true population mean.
Keywords: confidence interval, point estimate
7-2 Determining the Appropriate Sample Size
36. In estimating the population mean, a large sample will provide a more accurate estimate whenever
the population standard deviation is known.
Keywords: sample, estimate, standard deviation, population
37. A pilot sample is one that is used when a decision maker wishes to get an advanced idea of what the
mean of the population might be.
Keywords: pilot sample, population, mean
38. One factor that plays an important part in determining what the needed sample size is when
developing a confidence interval estimate is the level of confidence that you wish to use.
Answer: True (Easy)
Keywords: sample size, confidence interval, confidence level
39. All of the factors that are needed to determine the required sample size are within the control of the
decision maker.
Keywords: sample size, factors
40. A bank manager wishes to estimate the mean waiting time spent by customers at his bank. He knows
from previous experience that the standard deviation is about 4.0 minutes. If he desires a 90 percent
confidence interval estimate and wishes to have a margin of error of 1 minute, the required sample size
will be approximately 143.
Keywords: confidence interval, margin of error, sample size
41. The larger the sample size in an estimation application, the lower the confidence level used by a
decision maker in most cases will be.
Keywords: sample size, confidence level
42. Two confidence interval estimates were developed from the same sample from a population. The
wider interval will be the one that has the highest confidence level.
Keywords: confidence interval, confidence level, sample
171
43. In determining the required sample size in an application involving an estimate for the population
mean, if the population standard deviation is known, there is no compelling reason to select a pilot
sample.
Keywords: sample size, population, standard deviation
44. The main purpose of a pilot sample in an application involving an estimate for a population mean is
to determine what the margin of error will likely be.
Keywords: margin of error, pilot sample, estimate
45. The national sales manager for a textbook publishing company wishes to estimate the mean number
of books sold per college. She wishes to have her estimate be within + 30 copies and wants a 95 percent
confidence interval estimate. If a pilot sample of 30 schools gave a sample standard deviation equal to 60
books, the required total sample size is less than the pilot sample already taken.
Answer: True (Difficult)
Keywords: pilot sample, sample size, estimate, mean
46. If a pilot sample of n= 40 items has been used as a first step in determining a required sample size of
n = 360, the decision maker can go ahead and use these 40 and take a sample of only 320 more items.
Answer: True (Easy)
Keywords: pilot sample, sample size
47. The required sample size will be larger when sampling from a population that has a small variability.
Keywords: sample size, population, variability
48. If a decision maker desires a small margin of error and a high level of confidence, it is certain that
the required sample size will be quite large.
Keywords: margin of error, confidence level, sample size
49. In an effort to estimate the mean length of stay for motel guests at a major national motel chain, the
decision makers asked for a 95 percent confidence, and a margin of error of + 0.25 days. Further, it was
known that the population standard deviation is 0.50 days. Given this, the required sample size to
estimate the mean length of stay is about 16 customers.
Keywords: sample size, confidence, margin of error
50. In a sample size determination situation, reducing the margin of error by half will double the required
sample size.
Keywords: sample size, margin of error
51. The manager in charge of concessions at an NFL football stadium is interested in estimating the mean
dollars that are spent per person attending the games. A pilot sample of n = 50 people has revealed a
sample mean and standard deviation of $12.35 and $2.35 respectively. He wishes to estimate the
population mean within + $0.20 of the true mean and wishes to have a confidence level of 95 percent.
Given this, he needs to sample an additional 481 people.
Keywords: confidence level, sample size, margin of error
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52. A university computer lab manager wishes to estimate the mean time that students stay in the lab per
visit. She believes that the population standard deviation would be no larger than 10 minutes. Further,
she wishes to have a confidence level of 90 percent and a margin of error of
+ 2.00 minutes. Given this, the sample size that she uses is approximately 60 students.
Keywords: sample size, estimate, confidence level
53. An analyst for a financial investment firm recently went through the effort to determine the required
sample size for estimating the mean number of transactions per year for the clients of his firm. The
calculations, which were based on a 95 percent confidence level and a margin of error of + 3, gave a
required sample size of 300. Given this information, the value used for the population standard deviation
must have been about 26.5 transactions.
Keywords: standard deviation, sample size, margin of error
54. When a decision maker determines the required sample size for estimating a population mean, a
change in the confidence level will result in a change in the required sample size, provided that the
margin of error is also modified accordingly.
Keywords: sample size, confidence level, margin of error
55. The State Transportation Department wishes to estimate the mean speed of vehicles on a certain
stretch of highway. They wish to estimate the mean within + 0.75 mph and they wish to have a
confidence level equal to 99 percent. Based on this information only, they can determine that the required
sample size is 320 vehicles.
Keywords: sample size, confidence level, estimate
56. After taking a speed-reading course, students are supposed to be able to read faster than they could
before taking the course. A pilot sample of n = 25 students showed a mean increase of 300 words per
minute with a standard deviation equal to 60 words per minute. To estimate the population mean with 95
percent confidence and a margin of error of + 10 minutes, the required sample size is approximately 139
students.
Keywords: sample size, margin of error, standard deviation
57. Increasing the sample size will result in a point estimate that is closer to the true population value.
Answer: False Moderate
Keywords: sample size, point estimate, population
58. In estimating a population mean, increasing the confidence level will result in a higher margin of
error for a given sample size.
Keywords: estimate, confidence level, margin of error, sample size
59. A grocery store manager is interested in estimating the mean weight of apples received in a shipment.
If she wishes to have the estimate be within + .05 pound with 90 percent confidence, the sample size
should be 103 apples if she believes that the standard deviation is .08 pounds.
Keywords: sample size, standard deviation, margin of error
173
60. A random sample of 100 people was selected from a population of customers at a local bank. The
mean age of these customers was 40. If the population standard deviation is thought to be 5 years, the
margin of error for a 95 percent confidence interval estimate is .98 years.
Keywords: margin of error, standard deviation, confidence interval
7-3 Estimating a Population Proportion
61. In determining the required sample size when estimating a population proportion, it is necessary to
start with some idea of what that proportion is.
Keywords: sample size, population proportion, estimate
62. The concept of margin of error applies directly when estimating a population mean, but is not
appropriate when estimating a population proportion.
Keywords: margin of error, population proportion, estimate
63. A Parks and Recreation official surveyed 200 people at random who have used one of the city’s
parks. The survey revealed that 26 resided outside the city limits. If she had to arrive at one single value
to estimate the true proportion of park users who are residents of the city it would be 0.13.
Answer: True (Easy)
Keywords: population proportion, estimate
64. The one sure thing that can be said about a point estimate is that it will most likely be subject to
sampling error and not equal the parameter.
Answer: True (Easy)
Keywords: point estimate, sampling error
65. A political poll was recently conducted. In this randomly selected sample of 300 registered voters,
178 indicated that they were going to vote for a bond issue. Assuming that the polling agency wishes to
report the results with 95 percent confidence, the interval estimate for the proportion of people who will
vote for the bond issue is approximately + 0.0556.
Keywords: population proportion, interval estimate
66. In estimating a population proportion, the factors that are needed to determine the required sample
size are the confidence level, the margin of error and some idea of what the population proportion is.
Keywords: population proportion, sample size, confidence level, margin of error
67. For a given sample size and a given confidence level, the closer  is to 1.0, the greater the margin of
error will be.
Keywords: sample size, confidence level, margin of error
68. The procurement manager for a large company wishes to estimate the proportion of parts from a
supplier that are defective. She has selected a random sample of n = 200 incoming parts and has found
11 to be defective. Based on a 95 percent confidence level, the upper and lower limits for the confidence
interval estimate are approximately 0.0234 to 0.0866.
Keywords: population proportion, confidence interval, estimate
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69. A local pizza company is interested in estimating the percentage of customers who would take
advantage of a coupon offer. To do this, they give the coupon out to a random sample of 100 customers.
Of these, 45 actually use the coupon. At the 95 percent confidence level it would be appropriate for the
manager to conclude that possibly as many as 50 percent of his customers will redeem the coupon.
Keywords: population proportion, confidence interval
70. A local pizza company is interested in estimating the percentage of customers who would take
advantage of a coupon offer. To do this, they give the coupon out to a random sample of 100 customers.
Of these, 45 actually use the coupon. Based on a 95 percent confidence level, the upper and lower
confidence interval limits are approximately 0.3525 to 0.5475.
Keywords: confidence interval, population proportion
71. A publisher is interested in estimating the proportion of textbooks that students resell at the end of
the semester. He is interested in making this estimate using a confidence level of 95 percent and a
margin of error of + 0.02. Based upon his prior experience, he believes that  is somewhere around
0.60. Given this information, the required sample size is over 2,300 students.
Keywords: sample size, population proportion, margin of error
72. A major airline is interested in estimating the proportion of adults in a particular city that have flown
their airline during the past year. They wish their estimate to be within + 0.03 of the true population
proportion and they want to have 95 percent confidence. Assuming that a pilot sample of n = 50 people
showed that the percentage was 0.40, the required sample size to perform the estimation is just over 500
people.
Keywords: population proportion, confidence level, sample size
73. The t-distribution is used for the critical value when estimating a population proportion when the
standard deviation of the population is not known.
Keywords: t-distribution, population proportion
74. Recently, a report in a financial journal indicated that the 90 percent confidence interval estimate for
the proportion of investors who own one or mutual funds is between 0.88 and 0.92. Given this
information, the sample size that was used in this study was approximately 609 investors.
Keywords: sample size, confidence level, population proportion
75. A random sample of n = 500 people were surveyed recently to determine an estimate for the
proportion of people in the population who had attended at least some college. The estimate concluded
that between 0.357 and 0.443 of the population had attended. Given this information, we can determine
that the confidence level was approximately 95 percent.
Keywords: population proportion, confidence level, sample size
175
76. In determining the sample size requirement for an application involving the estimation of the
proportion of department store customers who pay using the store’s credit card, the closer the true
proportion is to .5, the larger will be the required sample size for a given margin of error and confidence
level.
Keywords: sample size, population proportion, margin of error, confidence level
77. The manager of the local county fair believes that no more than 30 percent of the adults in the county
would object to a fee increase to attend the fair if it meant that better entertainment could be secured. To
estimate the true proportion, he has selected a random sample of 200 adults. The manager will use a 90
percent confidence level. Assuming his assumption about the 30 percent holds, the margin of error for the
estimate will be approximately + .169.
Keywords: population proportion, margin of error, confidence level
78. Chicago Connection, a local pizza company, delivers pizzas for free within the market area. The
delivery drivers are paid $2.00 per delivery plus they get to keep any tips. To estimate the proportion of
deliveries that result in a tip to the driver, a random sample of 64 deliveries was selected. Of these, 48
times a tip was received. Based on this information, and using a 95 percent confidence level, the upper
limit for the confidence interval estimate is about .1061.
Keywords: confidence interval, upper limit, population proportion
79. Chicago Connection, a local pizza company, delivers pizzas for free within the market area. The
delivery drivers are paid $2.00 per delivery plus they get to keep any tips. To estimate the proportion of
deliveries that result in a tip to the driver, a random sample of 64 deliveries was selected. Of these, 48
times a tip was received. Based on this information, and using a 95 percent confidence level, the margin
of error for the estimate is approximately + .1061.
Keywords: margin of error, population proportion, confidence interval
80. Previous studies indicate that the proportion of season ticket holders for a college basketball team
that renew their seats is about .85. Using this figure, the sample size that is needed to estimate the true
proportion that plan to renew their seats using 95 percent confidence and a margin of error of + .02 is
about 1,225 people.
Keywords: sample size, population proportion, margin of error
176
MULTIPLE CHOICE QUESTIONS
7-1 Point and Confidence Interval Estimates
81. Which of the following statements applies to a point estimate?
a. The point estimate is a parameter.

b. The point estimate will tend to be accurate if the sample size exceeds 30 for non-
normal populations.
c. The point estimate is subject to sampling error and will almost always be different
than the population value.
d. The point estimate is needed to determine the required sample size when estimating
the population mean.
Answer: C (Moderate)
Keywords: point estimate, sampling error, population
82. Sampling error occurs when:
a. a non statistical sample is used.

b. the statistic computed from the sample is not equal to the parameter for the
population.
c. a random sample is used rather than when a convenience sample.
d. a confidence interval is used to estimate a population value rather than a point
estimate.
Answer: B (Easy)
Keywords: sampling error, statistic, parameter
83. The general format for a confidence interval is:
a. point estimate + z (Standard Deviation).

b. point estimate + (critical value)(standard error).
c. margin of error + (confidence coefficient) (standard error).
d. None of the above.
Answer: B (Easy)
Keywords: confidence interval, point estimate, standard error
177
84. In an application to estimate the mean number of miles that downtown employees commute to work
roundtrip each day, the following information is given:
n = 20
x  4.33
s  3.50
If the desired confidence level is 95 percent, the appropriate critical is:
a. z = 1.96.
b. t = 2.093.
c. t = 2.086.
d. .7826.
Answer: B (Moderate)
Keywords: t-statistic, confidence level
n = 20
x  4.33
s  3.50
The point estimate for the true population mean is:
a. 1.638.
b. 4.33 + 1.638.
c. 4.33.
Answer: C (Easy)
Keywords: point estimate, population mean
n = 20
x  4.33
s  3.50
Based on this information, the upper limit for a 95 percent confidence interval estimate for the true
population mean is:
a. about 5.97 miles.

b. about 7.83 miles.
c. nearly 12.0 miles.
Answer: A (Difficult)
178
87. In developing a confidence interval estimate for the population mean, which of the following is true?
a. The larger the sample standard deviation, the wider will be the interval estimate, all
other things being equal.
b. If the population standard deviation is unknown, the appropriate critical value should
be obtained from the t-distribution.
c. The confidence interval developed from a smaller sample size will have a larger
margin of error than one obtained using a larger samples size, all other things being
equal.
d. All of the above are true.
Answer: D (Moderate)
Keywords: confidence interval, population mean, t-distribution, sample size
88. The role of the sample mean in a confidence interval estimate for the population mean is to:
a. determine the margin of error in the estimate.

b. establish the level of confidence for the estimate.
c. determine the amount by which the estimate will miss the true population mean.
d. None of the above are true

Keywords: sample mean, population mean, confidence interval
89. In an effort to estimate the mean dollars spent per visit by customers of a food store, the manager has
selected a random sample of 100 cash register receipts. The mean of these was $45.67 with a sample
standard deviation equal to $12.30. Assuming that he wants to develop a 90 percent confidence interval
estimate, which of the following is the margin of error that will be reported?
a. About + $2.02
b. Nearly $50.20
c. 1.645
d. About $1.43
Keywords: margin of error, confidence interval
90. In an effort to estimate the mean dollars spent per visit by customers of a food store, the manager has
selected a random sample of 100 cash register receipts. The mean of these was $45.67 with a sample
standard deviation equal to $12.30. Assuming that he wants to develop a 90 percent confidence interval
estimate, the upper limit of the confidence interval estimate is:
a. about $2.02.
b. approximately $65.90.
c. about 47.69.
Answer: C (Difficult)
Keywords: upper limit, confidence interval, estimate
179
91. The margin of error is:
a. the largest possible sampling error at a specified level of confidence.

b. the critical value times the standard error of the sampling distribution.
c. Both a and b
d. the difference between the point estimate and the parameter.
Keywords: margin of error, sampling error, critical value
92. Which of the following statements is true with respect to the confidence level associated with an
estimation application?
a. The confidence level is a percentage value between 50 and 100 that corresponds to
the percentage of all possible confidence intervals, based on a given sample size, that will
contain the true population value.
b. The probability that the confidence interval estimate will contain the true population
value.
c. The degree of accuracy associated with the confidence interval estimate.
Answer: A (Moderate)
Keywords: confidence level, population value
93. In a situation where the population standard deviation is known and we wish to estimate the
population mean with 90 percent confidence, what is the appropriate critical value to use?
a. z = + 1.96
b. z = 2.33
c. z = 1.645
d. Can’t be determined without knowing the degrees of freedom
Keywords: critical value, confidence interval, population mean
94. In developing a confidence interval estimate for the population mean, the t-distribution is used to
obtain the critical value when:
a. the sample contains some extreme values that skew the results.
b. the population standard deviation is unknown.
c. the sampling that is being used is not a statistical sample.
Keywords: t-distribution, confidence interval
95. Which of the following statements is true with respect to the t-distribution?
a. The t-distribution is symmetrical.

b. The exact shape of the t-distribution depends on the number of degrees of freedom.
c. The t-distribution is more spread out than the standard normal distribution.
d. All of the above are true.
Keywords: t-distribution, degrees of freedom, spread
180
96. Which of the following statements is true?
a. The confidence interval equation when  is unknown and the sample size is large
can use a critical value from the standard normal distribution table.
b. The critical value for a confidence interval estimate for the mean of a population with
 known is a t value from the t-distribution.
c. The margin of error will tend to be larger when the sample size is increased.
d. Lowering the confidence level will provide a larger margin of error.
Keywords: sigma, confidence interval, normal distribution
97. If a decision maker wishes to reduce the margin of error associated with a confidence interval
estimate for a population mean, she can:
a. decrease the sample size.

b. reduce the confidence level.
c. Both a and b
d. do None of the above.
Keywords: margin of error, confidence interval, confidence level
98. When small samples are used to estimate a population mean, in cases where the population standard
deviation is unknown:
a. the t-distribution must be used to obtain the critical value.

b. the resulting margin of error for a confidence interval estimate will tend to be fairly
small.
c. there will be a large amount of sampling error.
Keywords: sample size, population mean, t-distribution
99. An educational organization in California is interested in estimating the mean number of minutes per
day that children between the age of 6 and 18 spend watching television per day. A previous study
showed that the population standard deviation was 21.5 minutes. The organization selected a random
sample of n = 200 children between the ages of 6 and 18 and recorded the number of minutes of TV that
each person watched on a particular day. The mean time was 191.3 minutes. If the leaders of the
organization wish to develop an interval estimate with 98 percent confidence, what critical value should
be used?
a. z = 1.645
b. t = 2.38
c. Approximately z = 2.33
d. Can’t be determined without knowing the margin of error.
Keywords: z-value, confidence interval
181
100. An educational organization in California is interested in estimating the mean number of minutes
per day that children between the age of 6 and 18 spend watching television per day. A previous study
sample of n = 200 children between the age of 6 and 18 and recorded the number of minutes of TV that
organization wish to develop an interval estimate with 98 percent confidence, what would be the upper
and lower limits of the interval estimate?
a. Approximately 187.76 minutes ----- 194.84 minutes

b. About 141.21 minutes ------- 241.40 minutes
c. Approximately 188.3 minutes -------- 194.3 minutes
Keywords: confidence interval, upper, lower, limit, z-value
101. An educational organization in California is interested in estimating the mean number of minutes
per day that children between the age of 6 and 18 spend watching television per day. A previous study
sample of n = 200 children between the age of 6 and 18 and recorded the number of minutes of TV that
organization wish to develop an interval estimate with 95 percent confidence, what will the margin of
error be?
a. Approximately + 1.52 minutes

b. About + 2.98 minutes
c. z = 1.96
d. Approximately + 42.14 minutes
Keywords: margin of error, confidence interval, z-value
102. The Wisconsin Dairy Association is interested in estimating the mean weekly consumption of milk
for adults over the age of 18 in that state. To do this, they have selected a random sample of 300 people
from the designated population. The following results were recorded:
x = 34.5 ounces s = 7.9 ounces
Given this information, if the leaders wish to estimate the mean milk consumption with 90 percent
confidence, what is the approximate margin of error in the estimate?
a. z = 1.645
b. + 12.996 ounces
c. + 0.456 ounces
d. + 0.75 ounces
Keywords: margin of error, confidence, z-value
182
103. The Internal Revenue Service (IRS) is interested in estimating the mean amount of money spent on
outside tax service by income tax filers filing as single on their individual form. To do this, they have
selected a random sample of n = 16 people from this population and surveyed them to determine the
sample mean and sample standard deviation. The following information was observed: x = $88.60
s = $30.79
Given this information, what is the 95 percent confidence interval for the mean dollars spent on outside
tax assistance by taxpayers who file as single?
a. Approximately $72.19 ------ $105.01

b. early $22.97 ------- $154.23
c. Approximately $80.90 ------- $96.30
Keywords: confidence interval, z-value, estimate
104. A study was recently conducted to estimate the mean cholesterol for adult males over the age of 55
years. The following random sample data were observed:
Given this information, what is the point estimate for the population mean?
a. About 73.35
b. + 102
c. About 242.6
d. Can’t be determined without knowing the confidence level.
Keywords: point estimate, mean
105. A study was recently conducted to estimate the mean cholesterol for adult males over the age of 55
years. The following random sample data were observed:
Given this information, what is the margin of error for a 95 percent confidence interval estimate for the
population mean?
a. Approximately 98.8 to 386.4

b. About 190.13 to 295.07
c. Nearly 233.4 to 256.6
Answer: B (Difficult)
Keywords: population mean, confidence interval
183
106. The following data represent a random sample of bank balances for a population of checking
account customers at a large eastern bank. Based on these data, what is the critical value for a 95 percent
confidence interval estimate for the true population mean?
a. 1.96
b. 2.1009
c. 2.1098
Keywords: confidence interval, population mean
107. The following data represent a random sample of bank balances for a population of checking
account customers at a large eastern bank. Based on these data, what is the 95 percent confidence
interval estimate for the true population mean?
a. Approximately $1,069 + $484.41

b. About $839.40 to $1,298.60
c. Approximately $1,069 + 2.1098
7-2 Determining the Appropriate Sample Size
108. The Hilbert Drug Store owner plans to survey a random sample of his customers with the objective
of estimating the mean dollars spent on pharmaceutical products during the past three months. He has
assumed that the population standard deviation is known to be $15.50. Given this information, what
would be the required sample size to estimate the population mean with 95 percent confidence and a
margin of error of + $2.00?
a. 231
b. 163
c. 16
184
109. A major tire manufacturer wishes to estimate the mean tread life in miles for one of their tires.
They wish to develop a confidence interval estimate that would have a maximum sampling error of 500
miles with 90 percent confidence. A pilot sample of n = 50 tires showed a sample standard deviation equal
to 4,000 miles. Based on this information, the required sample size is:
a. 124.
b. 246.
c. 174.
d. 196.
110. The purpose of a pilot sample is:
a. to provide a better idea of what the population mean will be.

b. to help clarify how the sampling process will be performed.
c. to provide an idea of what the population standard deviation might be.
d. to save time and money of having to carry out a full sampling plan.
Answer: C (Easy)
Keywords: pilot sample, standard deviation
111. Past experience indicates that the variance in the time it takes for a “fast lube” operation to actually
complete the lube and oil change for customers is 9.00 minutes. The manager wishes to estimate the
mean time with 99% confidence and a margin of error of + 0.50 minutes. Given this, what must the
sample size be?
a. About 238
b. Approximately 366
c. Nearly 500
Keywords: sample size, confidence, margin
112. A clothing manufacturer is interested in knowing the mean height of men in Mexico. They believe
that knowing this will help them in their clothes design and manufacturing. They wish to estimate the
mean within + 0.20 inches with 95 percent confidence. Before actually sampling the population, they
randomly selected 15 men and measured their heights (in inches) shown as follows.
Based on this information, how many more men should be sampled?
a. Approximately 1,522
b. Approximately 1,507
c. About 345
d. Nearly 775
Keywords: sample size, confidence, mean, standard deviation, margin of error
185
113. If a manager believes that the required sample size is too large for a situation in which she desires
to estimate the mean income of blue collar workers in a state, which of the following would lead to a
reduction in sample size?
a. Reduce the level of confidence

b. Allow a higher margin of error
c. Somehow reduce the variation in the population
d. All of the above.
Keywords: sample size, confidence level, margin of error, variation
114. A large midwestern university is interested in estimating the mean time that students spend at the
student recreation center per week. A previous study indicated that the standard deviation in time is
about 40 minutes per week. If the officials wish to estimate the mean time within + 10 minutes with a 90
percent confidence, what should the sample size be?
a. 44
b. 62
c. 302
d. Can’t be determined without knowing how many students there are at the university.
Keywords: sample size, standard devation, confidence
115. An intern working for a food processing company has submitted a report in which he says that the
company should use a sample size of 460 to estimate the mean weight of a packaged product. The report
further states that the confidence level would be 95 percent and that he has assumed that the population
standard deviation for the product weights is 0.3 pounds. However, he did not state anything about the
margin of error that was used. Based on the above information, what margin of error is implied by the
suggested sample size?
a. + 1.16 pounds approximately

b. About 0.0008 pounds
c. Approximately + 0.027 pounds
Keywords: margin of error, sample size, confidence
116. A study has indicated that the sample size necessary to estimate the average electricity use by
residential customers of a large western utility company is 900 customers. Assuming that the margin of
error associated with the estimate will be + 30 watts and the confidence level is stated to be 90 percent,
what was the value for the population standard deviation?
a. 265 watts
b. Approximately 547.1 watts
c. About 490 watts
d. Can’t be determined without knowing the size of the population.
Keywords: sample size, standard deviation, margin of error
186
117. The U.S. Post Office is interested in estimating the mean weight of packages shipped using the
overnight service. They plan to sample 300 packages. A pilot sample taken last year showed that the
standard deviation in weight was about 0.15 pounds. If they are interested in an estimate that has 95
percent confidence, what margin of error can they expect?
a. Approximately 0.017 pounds

b. About 0.0003 pounds
c. About 1.96
d. Can’t be determined without knowing the population mean.
Keywords: margin of error, sample size, standard deviation
118. A cell phone service provider has selected a random sample of 20 of its customers in an effort to
estimate the mean number of minutes used per day. The results of the sample included a sample mean of
34.5 minutes and a sample standard deviation equal to 11.5 minutes. Based on this information, and
using a 95 percent confidence level:
a. the critical value is z = 1.96.

b. the critical value is z = 1.645.
c. the critical value is t = 2.093.
d. The critical value can’t be determined without knowing the margin of error.
Keywords: t-statistic, confidence interval, confidence level
119. A cell phone service provider has selected a random sample of 20 of its customers in an effort to
estimate the mean number of minutes used per day. The results of the sample included a sample mean of
34.5 minutes and a sample standard deviation equal to 11.5 minutes. Based on this information, and
using a 95 percent confidence level:
a. the resulting margin of error is about + 5.38 minutes.

b. the standard error is about 39.88 minutes
c. t = 2.093.
Keywords: margin of error, confidence level, t-distribution
120. Which of the following will result in a larger margin of error in an application involving the
estimation of a population mean?
a. Increasing the sample size

b Decreasing the confidence level
c. Increasing the sample standard deviation
d. All of the above.
Keywords: margin of error, population mean, standard deviation
187
7-3 Estimating a Population Proportion
121. The administrator at Sacred Heart Hospital is interested in estimating the proportion of patients who
are satisfied with the meals at the hospital. A random sample of 250 patients was selected and the patients
were surveyed. Of these, 203 indicated that they were satisfied. Based on this, what is the estimate of
the standard error of the sampling distribution?
a. 0.8120
b. 0.0247
c. 0.0006
d. Can’t be determined without knowing  .
Keywords: standard error, proportion, sampling distribution
122. The produce manager for a large retail food chain is interested in estimating the percentage of
potatoes that arrive on a shipment with bruises. A random sample of 150 potatoes showed 14 with
bruises. Based on this information, what is the margin of error for a 95 percent confidence interval
estimate?
a. 0.0933
b. 0.0466
c. 0.0006
Keywords: margin of error, proportion
123. A random sample of 340 people in Chicago showed that 66 listened to WJKT – 1450, a radio
station in South Chicago Heights. Based on this sample information, what is the point estimate for the
proportion of people in Chicago that listen to WJKT – 1450?
a. 340
b. About 0.194
c. Can’t be determined without knowing the desired confidence level.
Answer: B (Easy)
Keywords: point estimate, proportion
124. A random sample of 340 people in Chicago showed that 66 listened to WJKT – 1450, a radio
station in South Chicago Heights. Based on this information, what is the upper limit for the 95 percent
confidence interval estimate for the proportion of people in Chicago that listen to WJKT – 1450?
a. 1.96
b. Approximately 0.0009
c. About 0.2361
d. About 0.2298
Keywords: proportion, confidence interval, point estimate
188
125. The State Transportation Department is interested in estimating the proportion of vehicle owners
that are operating vehicles without the required liability insurance. If they wish to estimate the population
proportion within + 0.02 and use 95 percent confidence, what is the largest random sample that they will
need?
a. About 2,401
b. Just under 600
c. Approximately 320
Keywords: sample size, proportion, confidence
126. A manager wishes to estimate the proportion of parts in his inventory that are in proper working
order. However, the sample size that he has been informed he will need exceeds his budget. Which of the
following steps might he take to reduce the required sample size?
a. Increase the confidence level

b. Decrease the desired margin of error
c. Use a smaller point estimate
Keywords: sample size, proportion, confidence, margin of error
127. A regional hardware chain is interested in estimating the proportion of their customers who own
their own homes. There is some evidence to suggest that the proportion might be around 0.70. Given
this, what sample size is required if they wish a 90 percent confidence level with a margin of error of + .
025?
a. About 355
b. Approximately 910
c. Almost 1,300
d. 100
Keywords: sample size, confidence level, margin of error, proportion
128. Suppose that an internal report submitted to the managers at a bank in Boston showed that with 95
percent confidence, the proportion of the bank’s customers who also have accounts at one or more other
banks is between .45 and .51. Given this information, what sample size was used to arrive at this
estimate?
a. About 344
b. Approximately 1,066
c. Just under 700
d. Can’t be determined without more information.
Keywords: sample size, proportion, confidence, amrgin of error
189
129. A sample of 250 people resulted in a confidence interval estimate for the proportion of people who
believe that the Federal Government’s proposed tax increase is justified is between 0.14 and 0.20. Based
on this information, what was the confidence level used in this estimation?
a. Approximately 1.59
b. 95 percent
c. Approximately 79 percent
Keywords: confidence level, proportion, sample size
130. During election years, polls are conducted to estimate the percentage of votes that will go to
particular candidates. Typically, newspapers report the results of these polls. For instance, a story ran
recently in which it was reported that the Republican candidate for mayor had 65 percent of the vote
based on a poll conducted with interviews of 689 randomly selected people. The article further stated that
the margin of error in the results is + 0.03. However, the story did not indicate what the confidence level
for the estimate was. What was it?
a. Approximately 90 percent
b. About 95 percent
c. Nearly 88 percent
Keywords: confidence level, proportion, margin of error
SHORT ANSWER QUESTIONS

(The questions in this section cover material from throughout the chapter. The answers that are
provided are only suggested responses. Individual student responses will vary. The suggested
answer contains the key points that student
answers should include.)
131. Under what conditions might a decision maker use a point estimate for the population mean?
ANSWER:
A point estimate is a single value computed from a sample as an estimate of a population value.
For instance, when estimating the population mean, the “best” point estimate is x , the sample mean.
However, point estimates are subject to sampling error. This means that x and  will most likely be
different. Therefore, the decision maker can have no confidence that the point estimate is equal to the
population value. About the only thing he or she can say is that the point estimate is wrong, but hope that
it is close. However, in those instances where the decision maker needs a single number to represent the
population mean, the point estimate, x , would be the best single value to use.
Moderate
Keywords: point estimate, population mean
190
132. In a recent audit report, an accounting firm stated that the mean sale per customer for the client was
estimated to be between $14.50 and $28.50. Further, this was based on a random sample of 100
customers and was computed using 95 percent confidence. Provide a correct interpretation of this
confidence interval estimate.
ANSWER:
A correct interpretation is: “Based on a random sample of 100 customers, with 95 percent
confidence, we believe that the true mean sale per customer is in the range $14.50 to $28.50.”
Moderate
133. In discussing a confidence interval estimate for a population mean, is it acceptable to provide an
interpretation like the following: “There is a 95 percent chance that  lies in the range 20 to 40”?
ANSWER:
No, this interpretation is not correct. As stated, it implies that  is a random variable that can
take on different values when in fact  is a parameter and has a fixed value. The 95 percent confidence
level indicates that of all possible confidence intervals constructed from a given size sample selected from
the population, and using z critical value associated with 95 percent confidence, 95 percent of the
intervals would contain the true population mean. The particular interval that we actually have computed
(20 to 40) will either contain  or it won’t.
Moderate
Keywords: confidence interval, population mean, interpretation
134. In estimating a population mean, under what conditions would the t-distribution be used?
ANSWER:
The t-distribution is used to obtain the critical value for a confidence interval estimate for the
population mean when the value for the population standard deviation is unknown and the sample size is
reasonably small. Technically, the t-distribution can be used when the standard deviation is not known,
but since the t-distribution and the z-distribution converge for large samples, it generally does not matter
in cases where the sample size is large. It should be noted that the t-distribution is based on the
assumption that the population is normally distributed. However, the t-distribution is usable as long as
the population is “reasonably” symmetric.
Moderate
Keywords: population mean, t-distribution, standard deviation, sample size
191
135. What are the disadvantages of using a small sample to estimate the population mean?
ANSWER:
A small sample impacts the estimation of a population mean in two main ways. First, in
developing a confidence interval estimate for  , we need the standard error of the sampling distribution.

The standard error is computed as . In a given situation, a small value of n will result in larger
n

standard error. Then, when we develop the confidence interval using x  z , the width of the interval
n
is greater than would be the case for a larger sample size. Thus, the margin of error is larger, which is
undesirable. Further, in most applications, the population standard deviation,  , is unknown and we
must estimate it using s, the sample standard deviation. In these cases, when the sample size is small, we
s
use the t-distribution to get the critical value for the confidence interval formula of the form: x  t .
n
Since the t-distribution is more spread out than the z-distribution, the width of the interval will be wider
when the small sample size is used. Thus, the width is expanded in two ways – larger standard error and
larger critical value.
Difficult
Keywords: sample size, population mean, confidence
192
136. One of the major oil products companies conducted a study recently to estimate the mean gallons of
gasoline purchased by customers per visit to a gasoline station. To do this, a random sample of customers
was selected with the following data being recorded that show the gallons of gasoline purchased.
Based on these sample data, construct and interpret a 95 percent confidence interval estimate for the
population mean.
ANSWER:
Since the population standard deviation is unknown, and since the size of the sample is fairly
small, the format for the confidence interval estimate is:
s
x t
n
If we assume that the population distribution is fairly symmetric or normally distributed, the t-distribution
can be used. The first thing we need to do is compute both x and s from the sample data. First for the
sample mean, we get:
x
 x  257.5  17.1667
n 15
Next, we compute the sample standard deviation using:
s
 (x  x) 2
 7.77
n 1
Next, for 95 percent confidence and degrees of freedom equal to n-1 = 14, the critical value for the t-
distribution is 2.1448. Then the confidence interval estimate is:
s 7.77
x t = 17.1667  2.1448
n 15
17.1667  4.3029
Thus, the 95 percent confidence interval estimate is 12.8638 ---- 21.4696. We interpret this as follows:
“Based on a random sample of 15 customers selected from the population of interest, with 95 percent
confidence we believe that the true mean purchase per visit to the gas station is between 12.8638 gallons
and 21.4696 gallons.”
Difficult
193
137. If a manager is interested in estimating the mean time customers spend shopping in a store on each
visit to the store, she may want to develop a confidence interval estimate. Suppose, she has determined
the required sample size and feels that she cannot afford one that large. What options are available?
ANSWER:
First, the formula for computing the sample size requirement for estimating a population mean is:
z 2 2
n
e2
There are several options that the manager might select to lower the sample size. First, she might lower
her desired level of confidence. This gives a smaller critical value and she can get by with a smaller
sample size if she does not have to be as confident. Second, she can allow a larger margin of error. This
means that the width of the interval will be wider (not as precise). Third, she can do some combination of
decreasing the confidence level and increasing the margin of error. Lastly, she may be able to reduce the
population standard deviation. However, this option is often out of the decision maker’s control.
Moderate
Keywords: sample size, confidence level, margin of error, standard deviation
138. A financial analyst is interested in estimating the proportion of publicly traded companies on the
New York Stock Exchange that have cash balances that are more than 10 percent of the total assets of the
company. A random sample of n = 100 companies shows that 13 had cash balances of more than 10
percent of assets. Based on this information, develop and interpret a 90 percent confidence interval
estimate for the population proportion.
ANSWER:
We are interested in estimating  , the population proportion. The format for the confidence
p (1  p )
interval estimate for  is: p  z . The sample proportion, p , is the point estimate and is
n
x 13
computed as: p    0.13
n 100
The critical value for 90 percent confidence is z = 1.645 from the standard normal table. Thus, the
0.13(1  0.13)
interval estimate is: 0.13  1.645 or 0.13 + 0.0553. This gives an interval estimate
100
of 0.0747 ----- 0.1853 We interpret this as follows: “Based on the random sample of size 100
companies, with 90 percent confidence, we believe that the proportion of all NYSE companies that have
cash balances of more than 10 percent their total assets is between 0.0747 and 0.1853.”
Moderate
Keywords: proportion, confidence interval
194
139. Under what circumstances would you wish to select a pilot sample?
ANSWER:
A pilot sample is used when we wish to determine a required sample size to estimate a population
mean or a population proportion. The pilot sample is a sample that is smaller than the final sample that
will be needed to complete the estimation. It is used to obtain information about the variation in the
population. In the case where we wish to estimate a population mean, in most cases we don’t know what
the population standard deviation is. From a pilot sample, we compute s, the sample standard deviation
and use that value in the sample size computation. When we wish to estimate a population proportion, the
pilot sample is used to get an idea of what  is. From the pilot sample, we compute p, the sample
proportion and use that in the sample size formula.
It should be remembered that the pilot sample is selected in the same manner as the final sample
will be selected. Thus, the pilot sample can be used as part of the overall sample.
Keywords: pilot sample, sample size, mean, proportion
140. A human resources manager wishes to estimate the proportion of employees in her large company
who have supplemental health insurance. What is the largest size sample she should select if she wants
95 percent confidence and a margin of error of + 0.01?
Moderate
She is interested in estimating  , the population proportion. The sample size formula is:
z  (1   )
2
n . Since we are trying to estimate  , we obviously don’t know it. A conservatively
e2
large sample size can be developed by substituting 0.50 for  . This gives:
2
1.96 ( 0.50 )(1  0.50)
n  2  9, 604
0.01
This may be too large for the manager to take. She might take a pilot sample to get a better idea of what
 is. For instance, if a pilot sample of 100 employees gives a sample proportion of p = 0.10, then the
required sample size would be:
1.96 2 (0.10)(1  0.10)

n  3, 458
0.012
If this is still too large, she might increase the margin of error or decrease the confidence level.
Moderate
Keywords: sample size, population proportion, confidence, margin of error
195

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Chapter 7: Estimating Population Values

ESTIMATING POPULATION VALUES

7-1 Point and Confidence Interval Estimates

7-2 Determining the Appropriate Sample Size

7-3 Estimating a Population Proportion

MULTIPLE CHOICE QUESTIONS

7-1 Point and Confidence Interval Estimates

81. Which of the following statements applies to a point estimate?

a. The point estimate is a parameter.

82. Sampling error occurs when:

a. a non statistical sample is used.

83. The general format for a confidence interval is:

a. point estimate + z (Standard Deviation).

a. about 5.97 miles.

a. determine the margin of error in the estimate.

d. None of the above are true

91. The margin of error is:

a. the largest possible sampling error at a specified level of confidence.

a. The t-distribution is symmetrical.

96. Which of the following statements is true?

a. decrease the sample size.

a. the t-distribution must be used to obtain the critical value.

a. Approximately 187.76 minutes ----- 194.84 minutes

a. Approximately + 1.52 minutes

a. Approximately $72.19 ------ $105.01

a. Approximately 98.8 to 386.4

a. Approximately $1,069 + $484.41

7-2 Determining the Appropriate Sample Size

110. The purpose of a pilot sample is:

a. to provide a better idea of what the population mean will be.

Based on this information, how many more men should be sampled?

a. Reduce the level of confidence

a. + 1.16 pounds approximately

a. Approximately 0.017 pounds

a. the critical value is z = 1.96.

a. the resulting margin of error is about + 5.38 minutes.

a. Increasing the sample size

7-3 Estimating a Population Proportion

a. Increase the confidence level

SHORT ANSWER QUESTIONS

1.96 2 (0.10)(1  0.10)

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