Question

The management team of a company with 10,000 employees is considering installing charging stations for electric cars in the company parking lots. In a random sample of 500 employees, 15 reported owning an electric car. What is a 99 percent confidence interval for the proportion of all employees at the company who own an electric car?

Answer 1

Answer:

The 99 percent confidence interval for the proportion of all employees at the company who own an electric car is (0.0104, 0.0496).

Step-by-step explanation:

In a sample with a number n of people surveyed with a probability of a success of $\pi$, and a confidence level of $1-\alpha$, we have the following confidence interval of proportions.

$\pi \pm z\sqrt{\frac{\pi(1-\pi)}{n}}$

In which

z is the zscore that has a pvalue of $1 - \frac{\alpha}{2}$.

In a random sample of 500 employees, 15 reported owning an electric car.

This means that $n = 500, \pi = \frac{15}{500} = 0.03$

99% confidence level

So $\alpha = 0.01$, z is the value of Z that has a pvalue of $1 - \frac{0.01}{2} = 0.995$, so $Z = 2.575$.

The lower limit of this interval is:

$\pi - z\sqrt{\frac{\pi(1-\pi)}{n}} = 0.03 - 2.575\sqrt{\frac{0.03*0.97}{500}} = 0.0104$

The upper limit of this interval is:

$\pi + z\sqrt{\frac{\pi(1-\pi)}{n}} = 0.03 + 2.575\sqrt{\frac{0.03*0.97}{500}} = 0.0496$

The 99 percent confidence interval for the proportion of all employees at the company who own an electric car is (0.0104, 0.0496).