Chapter 8, Problem 38PS

A survey is planned to determine the mean annual family medical expenses of employees of a large company. The management of the company wishes to be $95\%$ confident that the sample mean is correct to within $\pm \$50$ of the population mean annual family medical expenses. A previous study indicates that the standard deviation is approximately $\$400.$

a. How large a sample is necessary?

b. If management wants to be correct to within $\pm \$25,$ how many employees need to be selected?