Families USA, a monthly magazine that discusses issues related to health and health costs, surveyed 20 of its subscribers. It found that the annual health insurance premiums for a family with coverage through an employer averaged $10,979. The standard deviation of the sample was $1,000.
a. Based on this sample information, develop a 90 percent confidence interval for the population mean yearly premium.
b. How large a sample is needed to find the population mean within $250 at 99 percent confidence?
The solution provides step by step method for the calculation of confidence interval and sample size for population mean. Formula for the calculation and Interpretations of the results are also included. Interactive excel sheet is included. The user can edit the inputs and obtain the complete results for a new set of data.