The local energy company claims the average annual electricity bill for its subscribers is just $600. A consumer watchdog group wants to dispute this

floymdiT

floymdiT

Answered question

2021-03-11

The local energy company claims the average annual electricity bill for its subscribers is just $600. A consumer watchdog group wants to dispute this claim. All agree that the standard deviation sigma of annual electricity bills is $150.
Some time later, a wealthy activist provides funding for a simple random sample of 250 households. The average annual electricity bill for this sample is $622. Find a 95% confidence interval for the true mean annual electric bill, based on this sample.

Answer & Explanation

Demi-Leigh Barrera

Demi-Leigh Barrera

Skilled2021-03-12Added 97 answers

Step 1
It is assumed that the sample mean is 622 and the population standard deviation is 150.
Step 2
From the given information, the confidence level is 0.95 and the level of of significance (α) is 0.05(=10.95).
The 95% confidence interval for the true mean is obtained as follows:
95%CI=x±zα2(σn)
=622±z0.052(150250)
=622±1.96(150250)

=(603.4058,640.5942)

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