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StatisticsSTATISTICS F/BUSINESS+ECONOMICS-TEXTCosts are rising for all kinds of medical care. The mean monthly rent at assisted-living facilities was reported to have increased 17% over the last five years to $3486 ( The Wall Street Journal , October 27, 2012). Assume this cost estimate is based on a sample of 120 facilities and, from past studies, it can be assumed that the population standard deviation is σ = $650. a. Develop a 90% confidence interval estimate of the population mean monthly rent. b. Develop a 95% confidence interval estimate of the population mean monthly rent. c. Develop a 99% confidence interval estimate of the population mean monthly rent. d. What happens to the width of the confidence interval as the confidence level is increased? Does this seem reasonable? Explain.BuyFind*arrow_forward*

13th Edition

Anderson

Publisher: CENGAGE L

ISBN: 9781305881884

Chapter 8.1, Problem 10E

Textbook Problem

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Costs are rising for all kinds of medical care. The mean monthly rent at assisted-living facilities was reported to have increased 17% over the last five years to $3486 (*The Wall Street Journal*, October 27, 2012). Assume this cost estimate is based on a sample of 120 facilities and, from past studies, it can be assumed that the population standard deviation is *σ* = $650.

- a. Develop a 90% confidence interval estimate of the population mean monthly rent.
- b. Develop a 95% confidence interval estimate of the population mean monthly rent.
- c. Develop a 99% confidence interval estimate of the population mean monthly rent.
- d. What happens to the width of the confidence interval as the confidence level is increased? Does this seem reasonable? Explain.

Expert Solution

**a.**

To determine

Find the 90% confidence interval for the population mean monthly rent.

**Calculation:**

The given information is that the mean monthly rent at assisted-living facilities are increase 17% over the last five years is $3,486 and the population standard deviations is $650.

The formula for confidence interval for population mean is,

From the “Table 8.1 value of

The value of confidence interval for population mean is,

Expert Solution

**b.**

To determine

Find the 95% confidence interval for population mean monthly rent.

Expert Solution

**c.**

To determine

Find the 99% confidence interval for population mean monthly rent.

Expert Solution

**d.**

To determine

Explain the width of the confidence level when the increase of confidence level.

Check whether it is reasonable or not.

STATISTICS F/BUSINESS+ECONOMICS-TEXT

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