During a recent drought, a water utility in a certain town sampled 100 residential water bills and found that 75 of the residences had reduced their water consumption over that of the previous year. Find a 95% confidence interval for the proportion of residences that reduced their water consumption. Round the answers to three decimal places.

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Answer:

The 95% confidence interval for the proportion of residences that reduced their water consumption is (0.665, 0.835).

Step-by-step explanation:

In a sample with a number n of people surveyed with a probability of a success of [tex]\pi[/tex], and a confidence level of [tex]1-\alpha[/tex], we have the following confidence interval of proportions.

[tex]\pi \pm z\sqrt{\frac{\pi(1-\pi)}{n}}[/tex]

In which

z is the zscore that has a pvalue of [tex]1 - \frac{\alpha}{2}[/tex].

Sampled 100 residential water bills and found that 75 of the residences had reduced their water consumption over that of the previous year.

This means that [tex]n = 100, \pi = \frac{75}{100} = 0.75[/tex]

95% confidence level

So [tex]\alpha = 0.05[/tex], z is the value of Z that has a pvalue of [tex]1 - \frac{0.05}{2} = 0.975[/tex], so [tex]Z = 1.96[/tex].

The lower limit of this interval is:

[tex]\pi - z\sqrt{\frac{\pi(1-\pi)}{n}} = 0.75 - 1.96\sqrt{\frac{0.75*0.25}{100}} = 0.665[/tex]

The upper limit of this interval is:

[tex]\pi + z\sqrt{\frac{\pi(1-\pi)}{n}} = 0.75 + 1.96\sqrt{\frac{0.75*0.25}{100}} = 0.835[/tex]

The 95% confidence interval for the proportion of residences that reduced their water consumption is (0.665, 0.835).