Question

According to Edmunds, the average price that shoppers paid for a new car is $30,320. Assume that the standard deviation for the price shoppers pay is $8,740. A random sample of 38 people who purchased a new car paid an average of $32,700. Use a 98% confidence interval to test the validity of claim made by Edmunds.

Answer 1

Answer:

The claim is valid for 98% confidence interval. A further explanation is described below.

Step-by-step explanation:

The given values are:

Sample size,

n = 38

Sample mean,

$\bar{x}=32700$

Population standard deviation,

$\sigma=8740$

For 98% confidence interval,

Mean = $(\bar{x} \pm z^*\times \frac{\sigma}{\sqrt{n} } )$

On substituting the given values, we get

         = $(32700 \pm 2.326\times \frac{8740}{\sqrt{38} } )$

         = $(32700 \pm 3297.84)$

         = $(29402.16,35997.84)$

Thus the above is the appropriate solution.