Business Week reports that film production companies are gravitating toward Eastern Europe. Studios there have a reputation of skilled technical work at a relatively low cost. But Bulgaria is even cheaper, with costs below those of Hollywood. As an example, weekly soundstage rental prices are quoted as $3.77 per square meter in Bulgaria and $16.50 for its U.S. counterparts. To verify these figures, a sample of 50 rentals was taken, producing the average quoted for Bulgaria.
a. Determine the standard deviation of the weekly rental prices if the margin of error associated with the estimate was $2 using a 95% confidence level.
b. How much would the sample size have to be increased to decrease the margin of error by $1?
c. Calculate the change in the standard deviation that would have to be realized to produce the same decrease in the margin of error as realized in part b.