The EPA will grant a tax credit if the city-highway mileage estimate is at least 31 mpg

| July 29, 2018

The EPA will grant a tax credit if the city-highway mileage estimate is at least 31 mpg. Construct the 95% and 99% confidence intervals for the mean mpg [miles per gallon] if we have a data sample with 49 observations of mileage of a new car model, with x-bar = 31.5531 mpg and known std. dev. sigma = 0.8 mpg. Which CI is wider and why? Would the EPA grant a tax credit if the 99% CI is (31.26, 31.85) and why? This is an example of hypothesis testing using CIs. If the EPA minimum qualifying mileage were 33 mpg, instead of 31 mpg, would the EPA grant a tax credit with the same 99% CI?

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