Question 1082720: The following data represent the asking price of a simple random sample of homes for sale. Construct a 99% confidence interval with and without the outlier included. Comment on the effect the outlier has on the confidence interval.
$223,000
$279,900
$19,900
$143,000
$205,800
$181,500
$459,900
$212,000
$187,500
$201,500
$147,800
$264,900
Answer by Boreal(15235)   (Show Source):
You can put this solution on YOUR website! mean with is $210,558 with s=$102,878
99%CI is ($118,320, $302,800)
without the outlier mean is $227,891 with s=$87,618
99%CI is ($144,170, $311,620)
This is done using t.995, df=11 * s/sqrt(12) for the first and 1 less in n and df for the second. That is the interval, and it is added to and subtracted from the sample mean.
The interval is narrower, because the variability is less. The mean is larger
because a small number outlier was removed.
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