An entrepreneur wants to open an appliance service repair shop. She will like to know what the average home repair bill is, including the charge for the service call fro appliance repair in the area. She wants the estimate to be with $20 of the actual figure. She believes the range of such bills is between $30 and $600. How large a sample should the entrepreneur take if she wants to be 95% confident of the results?
Solution: An estimate of the standard deviation is
The 95% Margin of Error (MOE) is computed as
which means that
This implies that sample size should be at least n = 196