6-1 Dialogue: Confidence Intervals
· Write a publish of 1 to 2 paragraphs.
The B&Ok Actual Property Firm sells properties and is at the moment serving the Southeast area. It has just lately expanded to cowl the Northeast states. The B&Ok realtors are excited to now cowl all the East Coast and are working to arrange their southern brokers to increase their attain to the Northeast.
B&Ok has employed your organization to research the Northeast dwelling itemizing costs in an effort to give info to their brokers concerning the imply itemizing value at 95% confidence. Your organization provides two evaluation packages: one primarily based on a pattern dimension of 100 listings, and one other primarily based on a pattern dimension of 1,000 listings. As a result of there may be a further price for information assortment, your organization expenses extra for the bundle with 1,000 listings than for the bundle with 100 listings.
Pattern dimension of 100 listings:
· 95% confidence interval for the imply of the Northeast home itemizing value has a margin of error of $25,000
· Price for service to B&Ok: $2,000
Pattern dimension of 1,000 listings:
· 95% confidence interval for the imply of the Northeast home itemizing value has a margin of error of $5,000
· Price for service to B&Ok: $10,000
The B&Ok administration group doesn’t perceive the tradeoff between confidence stage, pattern dimension, and margin of error. B&Ok would really like you to return again together with your advice of the pattern dimension that would supply the gross sales brokers with the most effective understanding of northeast dwelling costs on the lowest price for service to B&Ok.
In different phrases, which choice is preferable?
· Spending extra on information assortment and having a smaller margin of error
· Spending much less on information assortment and having a bigger margin of error
· Selecting an choice someplace within the center
On your preliminary publish:
· Formulate a advice and write a confidence assertion within the context of this situation. For the needs of writing your confidence assertion, assume the pattern imply home itemizing value is $310,000 for each packages. “I’m [#] % assured the true imply . . . [in context].”
· Clarify the components that went into your advice, together with a dialogue of the margin of error
· Write a publish of 1 to 2 paragraphs.
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