Question

Many Alpine ski centers base their projections of revenues and profits on the assumption that the average Alpine skier skis four times per year. To investigate the validity of this assumption, a random sample of 63 skiers is drawn and each is asked to report the number of times he or she skied the previous year. The average number of times from those reported is 4.84. Suppose the population standard deviation is 2, can we infer at the 10% significance level that the assumption is wrong? Answer this question using the confidence interval estimation approach. If you use the test statistic approach you will only get at maximum 30% of the grade for this question. 5.

Answer 1

By using the confidence interval estimation approach we can infer at the 10% significance levels that the assumption is wrong . The confidence level will be less then 90% because the sample size is very less to rely on data. The confidence method only gives the correct assumption of or higher confidence percentage when there is large sample and standard deviations are also high. The assumption that 4.84 is final number of people who are skiers then it will be nearly wrong to say that.