1) After looking at the effect of sample size on standard error of the mean, ass

Question

1) After looking at the effect of sample size on standard error of the mean, assuming the same population standard deviation, what is the best conclusion?

http://imgur.com/a/SqS1s (link to picture of graph)

After looking at the effect of sample size on standard error of the mean, assuming the same population standard deviation, what is the best conclusion?

A)Increasing sample size increases the standard error of the mean; therefore, it is best to use as small a sample as possible in order to minimize data collection and analysis costs.

B) Increasing sample size has no effect on the magnitude of the standard error; therefore, using a very small sample size is preferable in order to minimize data collection and analysis costs.

C)Increasing sample size leads to a dramatic reduction in the standard error at first, but the benefits of increasing sample size on standard error are reduced as sample size is increased.

Case Problem: Foot Locker As a sales analyst for the shoe retailer Foot Locker, one of your responsibilities is measuring store productivity and then reporting your conclusion back to management. Foot Locker uses sales per square foot as a measure of store productivity. While preparing your report for the second quarter results (Q you are able to determine that annual sales for last year ran at a rate of $406 per sq re foot, Therefore, $406 per square foot will be your sales estimate for the population of all Foot Locker stores during Q2. For your Q2 Sales Report, yau decide to take a random sample of 64 stores. Using annual data from last year, you are able to determine that the standard deviation for sales per square foot for all 3,100 stares was $90. Therefore sgo per square faot wil be your populatian your Q2 For your random sample of 64 stores and using the population standard deviation of $80, you are able to calculate the standard errorfor your sample $80 64 $10

Explanation / Answer

From the given graph, it is clear that

C) Increasing sample size leads to a dramatic reduction in the standard error at first, but the benefits of increasing sample size on standard error are reduced as sample size is increased.

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