An insurance company would like to estimate the average liability (dollars) that they pay out due to automobile accidents caused by male drivers aged 18 to 25. The company will use this estimate to set rates for drivers that fall into this group. A small pilot sample has been taken of claims paid and the standard deviation was found to be $1250. In order for this estimate to be of any use to the company the 95% confidence interval can be no wider than $200 (total) explain and show your work
1. What's the maximum acceptable margin of error?
2. What's the confidence level C and corresponding z value?
3. Do we know the population standard deviation? If no, what do we use instead?
4. What's the minimum necessary sample size required for the research team to meet their criteria?