Pac-Trac, Inc., is a large manufacturer of video games. The market research department is designing a survey in order to determine attitudes towards the products. Additionally, the percentage of households owning video games and the average usage rate per week is to be determined. The department wants to be 95 percent confident of the results and does not want the error to exceed plus or minus 3 percentage points for video game ownership and plus or minus one hour for average usage rate. Previous reports indicate that about 20 percent of the households own video games and the average usage rate is 15 hours with a standard deviation of 5 hours.

a. What sample size would you recommend assuming only the percentage of households owning video games is to be determined? Show all your calculations.

b. What sample size would you recommend assuming only the average usage rate per week is to be determined? Show all your calculations.

c. What sample size would you recommend assuming both the above variables are to be determined? Why?

After the survey was conducted, the results indicated that 30 percent of the households owned video games and the average usage rate was 13 hours with a standard deviation of 4.

d. Compute the 95 percent confidence interval for the percentage of individuals owning video games. Comment on the degree of precision.

e. Compute the 95 percent confidence interval for the average usage rate. Comment on the degree of precision.