SOLUTION: Joe, a manager at a hamburger chain, wants to estimate a 95% confidence interval for the true mean cost of a hamburger in Buffalo. Joe samples 100 restaurants and discovers that t

Algebra ->  Testmodule -> SOLUTION: Joe, a manager at a hamburger chain, wants to estimate a 95% confidence interval for the true mean cost of a hamburger in Buffalo. Joe samples 100 restaurants and discovers that t      Log On


   

Question 1171770: Joe, a manager at a hamburger chain, wants to estimate a 95% confidence interval for the true mean cost
of a hamburger in Buffalo. Joe samples 100 restaurants and discovers that the average price was $2.40 with a sample standard deviation of 80 cents. The population is known to be normal.
a. Find the standard error of the mean.
b. Find the 95% confidence interval for the true mean price of a hamburger. Make sure you draw the
graph. Explain in words what the confidence interval means.
c. If Joe decides to charge $2.00 for a hamburger, would that be considered unusually low or a sale
price?
Answer by Boreal(15235) About Me  (Show Source):
You can put this solution on YOUR website!
SEM is .80/sqrt(100) =$0.08.
95% half-interval is z*sigma/sart(n)=1.96*0.80/10=0.156
the 95% interval is ($2.244, $2.556)
We are highly confident that the true value lies within the interval. Given that $2.00 is well below the lower limit of the interval, $2.00 sale would be an unusually low sale price.