Answer:
Step-by-step explanation:
1) Point estimate is the difference between the sample means. Therefore,
A point estimate for the difference between the mean purchases of the users of the two credit cards is = 140 - 125 = $15
2) Margin of error = z√(σ²/n1 + σ2²/n2)
Where
z is the z score from the 95% confidence level. From the normal distribution table, z = 1.96
s1 and s2 are standard deviation for both customers respectively.
Standard deviation = √variance
σ1 = √100 = 10
σ2 = √641 = 25.32
Margin of error = 1.96√(10²/64 + 25.32²/49 = 7.5
At 95% confidence, the margin of error is 7.5
3) The confidence interval for the difference of two population means is expressed as point estimate ± margin of error
Confidence interval = 15 ± 7.5
The upper boundary for the confidence interval is
15 - 7.5 = 7.5
The lower boundary for the confidence interval is
15 + 7.5 = 22.5
A 95% confidence interval estimate for the difference between the average purchases of the customers using the two different credit cards is $7.5 to $22.5
4) Since the population standard deviations are known, we would use the formula to determine the test statistic(z score)
z = (x1 - x2)/(√σ1²/n2 + σ2²/n2)
z = (140 - 125)/√10²/64 + 25.32²/49
z = 1.02
The test statistic for an alpha of .05 is 1.02
