Question

Annual starting salaries for college graduates with degrees in business administration are generally expected to be between $10,000 and $50,000. Assume that a 95% confidence interval estimate of the population mean annual starting salary is desired. Determine the planning value for the population standard deviation.
1. Determine how large a sample should be taken if the desired margin of error is:
a. $500
b. $200
c. $100

2. Would you recommend trying to obtain the $100 margin of error? Explain

Answer 1

Answer:

1) the planning value for the population standard deviation is 10,000

2)

a) Margin of error E = 500, n = 1536.64 ≈ 1537

b) Margin of error E = 200, n = 9604

c) Margin of error E = 100, n = 38416

3)

As we can see, sample size corresponding to margin of error of $100 is too large and may not be feasible.

Hence, I will not recommend trying to obtain the $100 margin of error in the present case.

Step-by-step explanation:

Given the data in the question;

1) Planning Value for the population standard deviation will be;

⇒ ( 50,000 - 10,000 ) / 4

= 40,000 / 4

σ = 10,000

Hence, the planning value for the population standard deviation is 10,000

2) how large a sample should be taken if the desired margin of error is;

we know that, n = [ ($z_{\alpha /2$ × σ ) / E ]²

given that confidence level = 95%, so $z_{\alpha /2$  = 1.96

Now,

a) Margin of error E = 500

n = [ ($z_{\alpha /2$ × σ ) / E ]²

n = [ ( 1.96 × 10000 ) / 500 ]²

n = [ 19600 / 500 ]²

n = 1536.64 ≈ 1537

b) Margin of error E = 200

n = [ ($z_{\alpha /2$ × σ ) / E ]²

n = [ ( 1.96 × 10000 ) / 200 ]²

n = [ 19600 / 200 ]²

n = 9604

c)  Margin of error E = 100

n = [ ($z_{\alpha /2$ × σ ) / E ]²

n = [ ( 1.96 × 10000 ) / 100 ]²

n = [ 19600 / 100 ]²

n = 38416

3) Would you recommend trying to obtain the $100 margin of error?

As we can see, sample size corresponding to margin of error of $100 is too large and may not be feasible.

Hence, I will not recommend trying to obtain the $100 margin of error in the present case.