Chapter 8.5, Problem 44E

Suppose a sample of 10001 erroneous Federal income tax returns from last year has been taken and is provided in the DATAfile FedTaxErrors. A positive value indicates the taxpayer underpaid and a negative value indicates that the taxpayer overpaid. Also suppose the IRS has established that the standard deviation of errors made on Federal income tax returns is σ = 12,300.

1. a. What is the point estimate for the mean error made on erroneous Federal income tax returns last year?
2. b. Using 95% confidence, what is the margin of error?
3. c. Using the results from part (a) and part (b), develop the 95% confidence interval estimate of the mean error made on erroneous Federal income tax returns last year.