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William is interested in studying whether the average household incomein city A is lower than the national benchmark,0= $51,500. He collects income information from a
William is interested in studying whether the average household incomein city A is lower than the national benchmark,0= $51,500. He collects income information from a random sample of 100 households, conducts a one-sample z test using the mean income of the sample the national benchmark, and constructs a confidence interval of the sample mean.
- Explain, in the context of the above scenario, what a sampling distribution is(4 points).
- It is well known that the distribution of income is highly and positively skewed, but the one-sample z test is based on critical values obtained from a standard normal distribution. Why is the skewness of income not a problem in this situation?(4 points)
- William obtains a 95% confidence interval of [42,050, 55,125]. Interpret this confidence interval(4 points).
- What could William have done to obtain a narrower (i.e., more precise) confidence interval?(3 points).
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