Question

An automobile insurance firm wants to find the average amount per claim for auto body repairs. Their summary records combine amounts for body repair with all other amounts, so a sample of individual claims must be taken. A 95% confidence interval within $25 of the population mean is wanted. Assume σ = $400. How large a sample is needed?

Answer 1

ANSWER:-

Given data,

Confidence interval value = 95%

Margin error =$25

Standard deviation = $400

Z value for 95% ci value 1.96

Large a sample is needed (n) = [(Z*σ)/ME]^2

n=[(1.96*400)/25]^2

=[784/25]^2

=[31.36]^2

=983.4496

~984

984 large sample is needed