Question 204089: determine how many card holders should be sampled.
what is the required sample size needed to be able to estimate the mean dollars that credit card holders will spend each month. Within plus or minus $10.00 of the true mean with a 98% confidence level? Standard deviation is thought to be $500.00. how many card holders should be sampled? We then find out it will cost $5.00 per sample and the company is only planning to spend $10,000.00 on the sample. What will the trade off be when you lower the sample to $10,000.00 to meet their budget?
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! determine how many card holders should be sampled.
what is the required sample size needed to be able to estimate the mean dollars that credit card holders will spend each month. Within plus or minus $10.00 of the true mean with a 98% confidence level? Standard deviation is thought to be $500.00. how many card holders should be sampled? We then find out it will cost $5.00 per sample and the company is only planning to spend $10,000.00 on the sample. What will the trade off be when you lower the sample to $10,000.00 to meet their budget
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n = [z*s/E]^2
n = [2.0537*500/10]^2 = 102.69^2 = 10544.7
Rounded up you get n = 10545
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If you lower the sample size the confidence level will decrease
or the margin of error will increase or both will happen.
That is because sample size and z* are directly related and
sample size and E are inversely related.
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Cheers,
Stan H.
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