(10 points) A market research firm supplies manufacturers with estimates of the retail sales of their products from samples of retail stores. Marketing managers are prone to look at the estimate and ignore sampling error. A random sample of 36 stores this year shows mean sales of 75 units of a small appliance with a standard deviation of 6 units. During the same point in time last year, a random sample of 49 stores had mean sales of 68 units with standard deviation 7 units. It is of interest to construct a 95 percent confidence interval for the difference in population means ????1−????2, where ????1 is the mean of this year's sales and ????2 is the mean of last year's sales. Enter values below rounded to three decimal places. (a) The estimate is: . (b) The standard error is: .

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Answer:

a) [tex]\bar X_1 -\bar X_2 =75-68=7[/tex]

b)  [tex]SE= \sqrt{\frac{6^2}{36}+\frac{7^}{49}}=1.414[/tex]

On this case the 95% confidence interval would be given by [tex]4.186 \leq \mu_1 -\mu_2 \leq 9.814[/tex]  

Step-by-step explanation:

Previous concepts

A confidence interval is "a range of values that’s likely to include a population value with a certain degree of confidence. It is often expressed a % whereby a population means lies between an upper and lower interval".

The margin of error is the range of values below and above the sample statistic in a confidence interval.

Normal distribution, is a "probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean".

[tex]\bar X_1 =75[/tex] represent the sample mean 1

 [tex]\bar X_2 =68[/tex] represent the sample mean 2

n1=36 represent the sample 1 size  

n2=49 represent the sample 2 size  

[tex]s_1 =6[/tex] sample standard deviation for sample 1

[tex]s_2 =7[/tex] sample standard deviation for sample 2

[tex]\mu_1 -\mu_2[/tex] parameter of interest.

Part a

The confidence interval for the difference of means is given by the following formula:

[tex](\bar X_1 -\bar X_2) \pm t_{\alpha/2}\sqrt{\frac{s^2_1}{n_1}+\frac{s^2_2}{n_2}}[/tex]   (1)

The point of estimate for [tex]\mu_1 -\mu_2[/tex] is just given by:

[tex]\bar X_1 -\bar X_2 =75-68=7[/tex]

In order to calculate the critical value [tex]t_{\alpha/2}[/tex] we need to find first the degrees of freedom, given by:

[tex]df=n_1 +n_2 -1=36+49-2=83[/tex]

Since the Confidence is 0.95 or 95%, the value of [tex]\alpha=0.05[/tex] and [tex]\alpha/2 =0.025[/tex], and we can use excel, a calculator or a tabel to find the critical value. The excel command would be: "=-T.INV(0.025,83)".And we see that [tex]t_{\alpha/2}=1.99[/tex]

Part b

The standard error is given by the following formula:

[tex]SE=\sqrt{\frac{s^2_1}{n_1}+\frac{s^2_2}{n_2}}[/tex]

And replacing we have:

[tex]SE=\sqrt{\frac{6^2}{36}+\frac{7^}{49}}=1.414[/tex]

Confidence interval

Now we have everything in order to replace into formula (1):

[tex]7-1.99\sqrt{\frac{6^2}{36}+\frac{7^}{49}}=4.186[/tex]    

[tex]7+1.99\sqrt{\frac{6^2}{36}+\frac{7^}{49}}=9.814[/tex]

So on this case the 95% confidence interval would be given by [tex]4.186 \leq \mu_1 -\mu_2 \leq 9.814[/tex]    

Using the Central Limit Theorem, it is found that:

a) The estimate is of 7 units.

b) The standard error is of 1.414 units.

Item a:

  • This year, the mean is [tex]\mu_1 = 75[/tex]
  • Last year, the mean was [tex]\mu_2 = 68[/tex]

By the Central Limit Theorem, the estimate for the mean of the difference distribution is the difference of the means, thus:

[tex]\mu = \mu_1 - \mu_2 = 75 - 68 = 7[/tex]

The estimate is of 7 units.

Item b:

By the Central Limit Theorem, the standard error for each sample is the standard deviation for the sample divided by the sample size, thus:

[tex]s_1 = \frac{6}{\sqrt{36}} = 1[/tex]

[tex]s_2 = \frac{7}{\sqrt{49}} = 1[/tex]

The standard error of the difference is the square root of the sum of the variances, thus:

[tex]s = \sqrt{s_1^2 + s_2^2} = \sqrt{1^2 + 1^2} = \sqrt{2} = 1.414[/tex].

The standard error is of 1.414 units.

A similar problem is given at https://brainly.com/question/23274490

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