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Products 鈥淢ade in the USA.鈥 Refer to Exercise 2.154 (p. 143) and the Journal of Global Business (Spring 2002) survey to determine what 鈥淢ade in the USA鈥 means to consumers. Recall that 106 shoppers at a shopping mall in Muncie, Indiana, responded to the question, 鈥淢ade in the USA鈥 means what percentage of U.S. labor and materials?鈥 Sixty-four shoppers answered,鈥100%.鈥

a. Define the population of interest in the survey.

b. What is the characteristic of interest in the population?

c. Estimate the true proportion of consumers who believe 鈥淢ade in the USA鈥 means 100% U.S. labor and materials using a 90% confidence interval.

d. Give a practical interpretation of the interval, part c.

e. Explain what the phrase 鈥90% confidence鈥 means for this interval.

f. Compute the sample size necessary to estimate the true proportion to within .05 using a 90% confidence interval.

Short Answer

Expert verified

a. All consumers who shop at the shopping mall in Muncie, Indiana constitute the population.

b. The true population of consumers who believe 鈥淢ade in the USA鈥 means 100% of U.S. labor and material.

c. The point estimate of the population proportion p is 0.604 andthe 90% confidence interval for the population proportion is (0.5259, 0.6821).

d. The true population of consumers who believe 鈥淢ade in the USA鈥 means that 10% U.S. labor and materials lies between 0.5259 and 0.6821 at 90% confidence.

e. 90% confidence means 90% confidence interval will contain the true population proportion.

f. To estimate the true proportion to be within 0.05 by using 90% confidence interval, 259 samples are needed

Step by step solution

01

Given information

Let the sample size be 106 and number of successes is 64.

02

Defining population of interest

a.

All consumers who shop at the shopping mall in Muncie, Indiana constitute the population.

03

Defining characteristics of interest

b.

The true population of consumers who believe 鈥淢ade in the USA鈥 means 100% of U.S. labor and material.

04

Estimating the true proportion of consumers and confidence interval

c.

Since, the point estimate p^of the population proportion p is calculated using the following formula:

p=xn

Therefore,

p^=64106=0.604

Therefore, the point estimate of the population proportion p is 0.604.

The sample size is large enough if the below conditions are satisfied.

np^15,n1-p^15

Obtain the value of np^,

np^=1060.604=64.02515

Obtain the value of n1-p^

n1-p^=1061-0.604=1060.396=41.97615

Since,

The value of np^andn1-p^is greater than 15, the sample size is sufficiently large. Thus, it can be concluded that the normal approximation is reasonable.

Let the confidence level be 0.90

1-=0.90=1-0.90=0.10

So, 2=0.05

From table, the required value for 90% confidence level is 1.645.

The 90% confidence interval is obtained as

p^+z0.05p^q^n=0.6040.6040.396106=0.6041.6450.002256=0.6040.0781

That is,

0.604-0.0781,0.604+0.0781=0.5259,0.0621

Thus, the 90% confidence interval for the population proportion is (0.5259, 0.6821).

05

Interpretation for confidence interval 

d.

The true population of consumers who believe 鈥淢ade in the USA鈥 means that 100% U.S. labor and materials lies between 0.5259 and 0.6821 at 90% confidence

06

Estimating the true proportion of consumers and confidence interval

e.

The 鈥90% confidence means, for each repeated samples size of 106, the 90% of the interval for the true population of consumes who believe 鈥 Made in the USA鈥 means that 100% U.S. labor and materials lie within the upper and lower limit and the confidence interval gives the plausible values for the population proportion. That is, the 90% confidence interval will contain the true population proportion.

07

Calculating the sample size 

f.

The formula for sample size is given below;

n=z2pqME2

Here, the product of pq is unknown, then using the sample fraction of success,p^

Substitute 1.645 forz0.05 , 0.604 for p^, 0.396 for q^, and 0.5 for ME in the above equation.

n=1.64520.6040.3960.052=0.6470.25259

Thus, the required sample size is 259.

Hence, to estimate the true proportion to be within 0.05 by using 90% confidence interval, 259 samples are needed

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