An economist would like to estimate a 99% confidence interval for the average real estate taxes collected by a small town in California. In a prior analysis, the standard deviation of real estate taxes was reported as $1,260.

What is the minimum sample size required by the economist if he wants to restrict the margin of error to $560?

So the answer for this case would be n=34 rounded up to the nearest integer

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".

represent the sample mean for the sample  

population mean (variable of interest)

represent the population standard deviation

n represent the sample size  

Solution to the problem

The margin of error is given by this formula:

   (a)

And on this case we have that ME =560 and we are interested in order to find the value of n, if we solve n from equation (a) we got:

  (b)

The critical value for 99% of confidence interval now can be founded using the normal distribution. And in excel we can use this formla to find it:"=-NORM.INV(0.005;0;1)", and we got , replacing into formula (b) we got:

So the answer for this case would be n=34 rounded up to the nearest integer

step-by-step explanation:

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