Warren County Telephone Company claims in its annual report that “the typical cu

Question

Warren County Telephone Company claims in its annual report that “the typical customer spends $60 per month on local and long-distance service.” A sample of 12 subscribers revealed the following amounts spent last month.

$63 $66 $64 $67 $56 $64 $69 $61 $64 $55 $54 $67

a. What is the point estimate of the population mean? (Round your answer to 3 decimal places.) Estimated population mean $

b. Develop a 90% confidence interval for the population mean. (Use t Distribution Table.) (Round your answers to 3 decimal places.) Confidence interval for the population mean $ and $

c. Is the company's claim that the "typical customer" spends $60 per month reasonable? Yes, No?

Explanation / Answer

a) point estimate of the population mean = 62.5

b) Here, alpha = 0.05 , df = 12 -1 = 11 , t value = 1.796

Here, std. deviation = 2.5

ME = t * s / sqrt(12) = 0.72

= 1.796 * 0.72 = 1.293

mean - ME < mu < mean + ME

62.5 - 1.293 < mu < 62.5 + 1.293

61.207 < mu < 63.793

c) No , because 60 is outside the CI

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