In order to set​ rates, an insurance company is trying to estimate the number of sick days that full time workers at an auto repair shop take per year. A previous study indicated that the population standard deviation is 2.8 days. How large a sample must be selected if the company wants to be​ 95% confident that the true mean differs from the sample mean by no more than 1​ day?
A. 512
B. 1024
C. 141
D. 31

Respuesta :

Answer:

D. 31

Step-by-step explanation:

We have that to find our [tex]\alpha[/tex] level, that is the subtraction of 1 by the confidence interval divided by 2. So:

[tex]\alpha = \frac{1 - 0.95}{2} = 0.025[/tex]

Now, we have to find z in the Ztable as such z has a pvalue of [tex]1 - \alpha[/tex].

That is z with a pvalue of [tex]1 - 0.025 = 0.975[/tex], so Z = 1.96.

Now, find the margin of error M as such

[tex]M = z\frac{\sigma}{\sqrt{n}}[/tex]

In which [tex]\sigma[/tex] is the standard deviation of the population and n is the size of the sample.

A previous study indicated that the population standard deviation is 2.8 days.

This means that [tex]\sigma = 2.8[/tex]

How large a sample must be selected if the company wants to be​ 95% confident that the true mean differs from the sample mean by no more than 1​ day?

This is n for which M = 1. So

[tex]M = z\frac{\sigma}{\sqrt{n}}[/tex]

[tex]1 = 1.96\frac{2.8}{\sqrt{n}}[/tex]

[tex]\sqrt{n} = 1.96*2.8[/tex]

[tex](\sqrt{n})^2 = (1.96*2.8)^2[/tex]

[tex]n = 30.12[/tex]

Rounding up, at least 31 people are needed, and the correct answer is given by option D.