STAT 201

More Estimation Practice Problems and Solutions

1. The QC manager at a light bulb factory needs to estimate the average lifetime of a
large shipment of bulbs made at the factory. The standard deviation of lifetimes is known
to be 100 hours. A random sample of 64 bulbs from the shipment results in a sample
mean lifetime of X = 350 hours.

(a) Find a 95% confidence interval for the mean lifetime for the entire shipment.

(b) Suppose that the standard deviation was 80 rather than 100 hours. Recalculate your
confidence interval from Part (a). Is it narrower or wider than your solution to (a)?

2. Suppose that we wish to estimate the proportion π of Philadelphia residents who think
that the quality of life in Philadelphia is excellent. We have no idea regarding the value
of this proportion. What sample size should be used if we want to estimate π to within ±
0.04 with 99% confidence?

3. In a nationwide random sample of 250 business majors who are graduating from
college this spring, we observe that 80 have not found a job. Find a 95% confidence
interval for the proportion of all graduating business majors who have not found a job.

4. Twelve owners of Ford diesel pickups are randomly selected and asked to report their
highway gasoline mileage. The resulting data have a sample average of X = 17.2 mpg
with a standard deviation of s = 1.4 mpg. Assuming that highway mileage values follow
a normal distribution, find a 90% confidence interval for the mean highway gasoline
mileage for all Ford diesel pickups.

5. As part of determining what to charge for its policies, an insurance company (Acme
Insurance) needs to estimate the average cost of bodily injury claims paid out when the
company’s policyholder is at fault, based on a random sample of past claims. They’d like
to be 95% confident that the estimate is within ± $200, and their best guess is that the
standard deviation for bodily injury claims is around $8,000. What sample size should be
used?

6. Acme Insurance would also like to estimate the proportion of times that an accident
caused by one of their policyholders results in a bodily injury claim. They know that, for
their industry, this proportion is equal to 22%, so it seems reasonable to assume that this
value might also apply to Acme. (It’s a good initial guess.) Once again, the estimate will
be based on looking at a random sample of past claims. What sample size should be used
if Acme wishes to estimate this proportion to within ±0.05 with 98% confidence?
Brief Solutions

1. (a) Need a CI for a mean, standard deviation is known, OK to assume normal

distribution since n ≥ 30. It’s a “z” interval! Calculate 350 ± 1.96(100/√64) = 350 ± 24.5
or (325.5, 374.5). We’re 95% confident that this interval contains the mean bulb lifetime
for the entire shipment.

(b) Same formula but use 80 for σ: 350 ± 1.96(80/√64) = 350 ± 19.6 or (330.4, 369.6).
The interval is narrower, which makes sense: there is less random variation or “noise” in
the data so we obtain a more accurate estimate of the population mean.

2. With no idea of the value of p, use p = 0.5 in the sample size formula. You get
2.576 2 (.5)(1 − .5)
n= = 1,036.8 which you should round up to 1,037. So we’d need a
0.04 2
sample of size 1,037 to guarantee that we’d obtain the desired level of accuracy.

3. This is a CI for a population proportion. The sample proportion is p = 80/250 = 0.32.

0.32(0.68)
The CI is 0.32 ± 1.96 = 0.32 ± 0.0578 or (0.2622, 0.3778). So we’re 95%
250
confident that the proportion of all graduating business majors who have not found a job
is between 26.22% and 37.78%. Note that this is not very accurate (it’s pretty wide):
you need large sample sizes to estimate proportions accurately! You don’t get much
accuracy with a sample size of 250.

4. We have a normal population with an unknown standard deviation, so this requires a

“t” interval, where the t-multiplier is based on 12 – 1 = 11 degrees of freedom. Solution
is 17.2 ± 1.796(1.4/√12) = 17.2 ± 0.726 or (16.474, 17.926). We’re 90% confident that
the mean mpg for all diesel trucks in “captured” by this interval.

5. We need the sample size required to estimate a population mean to a given level of
z 2σ 2 1.96 28000 2
accuracy. Formula is n = 2 = = 6,146.56 so use a sample size of 6,147.
e 200 2
(There is a lot of variability in the data, so we need a large sample size to get a good
estimate of the mean.)

6. Use the sample size for estimating a proportion formula, with p = 0.22 and z = 2.33.
(z is chosen to give 98% coverage so 49% on each side of the mean). Result is
(2.33) 2 (0.22)(0.78)
n= = 372.64 so round up to 373. We’d need a sample of size 373
0.052
to achieve the desired level of accuracy.