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Bob is the owner of Bob's Texaco Gas Station. Bob would like to estimate the mean number of gallons sold to his customers.
1. Bob is the owner of Bob's Texaco Gas Station. Bob would like to estimate the mean number of gallons sold to his customers. From his records, he randomly selects 60 sales receipts and finds the mean number of gallons sold is 8.6 and the sample standard deviation is 2.3 gallons.
a. What is the point estimate of the population mean?
b. Develop a 99 percent confidence interval around the estimate of the population mean from (a) above.
c. Interpret and comment on your answer to (b). Be detailed in your response.
2. When you left MSU with your MSM degree, you decided to start a small business. After a couple of years of steady growth, you decided to take a closer look at your benefits package and to expand it to include dental insurance for all employees. The question is: How much does a typical employee sand his or her family spend per year on dental expenses in Minot, ND? You decide to ask the local Chamber of Commerce for help. You put together a survey and found that of the 45 completed surveys returned to you, the mean amount spent last year on this expense per family was $1,820 with a standard deviation of $660.
a. What is the point estimate of the population mean?
b. Develop a 95 percent confidence interval around the estimate of the population mean from (a) above.
c. Before you conducted the survey, you decided that your company could afford this expense if the average was $1,700 per employee per year. Is it possible that the population mean could be $1,700? Justify your answer.
