University:
Eastern Kentucky University
Course:
STA 270 | Applied Statistics
Academic year:

2021
Views:

243

Pages:

2
Author:

Braedon Harvey

Wednesday, February 10, 2021 Module 6 Discussion Post Confidence Intervals Sample size of 100 listings: 95% confidence interval for the mean of the Northeast house listing price has a margin of error of $25,000 Cost for service to B&K: $2,000 Sample size of 1,000 listings: 95% confidence interval for the mean of the Northeast house listing price has a margin of error of $8,000 Cost for service to B&K: $10,000 The B&K management team does not understand the tradeoff between confidence level, sample size, and margin of error. B&K would like you to come back with your recommendation of the sample size that would provide the sales agents with the best understanding of northeast home prices at the lowest cost for service to B&K. In other words, which option is preferable? Spending more on data collection and having a smaller margin of error Spending less on data collection and having a larger margin of error Choosing an option somewhere in the middle For your initial post: Formulate a recommendation and write a confidence statement in the context of this scenario. For the purposes of writing your confidence statement, assume the sample mean house listing price is $310,000 for both packages. “I am [#] % confident the true mean . . . [in context].” Explain the factors that went into your recommendation, including a discussion of the margin of error. To whom it may concern, As stated in our pamphlet we only offer two packages: Sample size of 100 listings: 95% confidence interval for the mean of the Northeast house listing price has a margin of error of $25,000 Cost for service to B&K: $2,000 Sample size of 1,000 listings: 95% confidence interval for the mean of the Northeast house listing price has a margin of error of $8,000 Cost for service to B&K: $10,000 From the options stated above. We would recommend choosing a sample size of 1,000 listings with a margin error of 8,000. There are various reasons why this is the better choice, I will further explain how. A larger sample gives a more accurate presentation of the population than a smaller sample. Larger samples are also, less likely to be affected by data errors (outliers or gaps). Looking at the margin errors of the two sample choices, it’s obvious that the sample of 100 has a greater margin of error (25,000). This goes back to what I stated Wednesday, February 10, 2021 Module 6 Discussion Post Confidence Intervals before, it is likely that the margin error of the sample of 100 is being affected by data errors (outliers or gaps). Also, a larger margin error indicates that the results of the sample are less reliable. To sum up everything that has been stated so far, I would recommend that the B & K Real Estate Company choose the sample of 1,000. It is better to spend more for better and accurate results than to spend less for inaccurate results. I am 95% confident that the mean of $310,000 lies between the confidence interval of [$302,000, $318,000].

Module 6 Discussion Post Confidence Intervals

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