Exercise · ZW-CENTRAL-LIMIT-THEOREM-009 · ★★★ Advanced

If the sample size is multiplied by four, what happens to the standard error \(\sigma/\sqrt n\)?

Choose one option.

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  • C. It is divided by 2

Explanation

Since \(\sqrt{4n}=2\sqrt n\), the standard error is halved: gaining precision costs many observations.

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Review the concept: Central limit theorem

The central limit theorem states that the average \(\bar X_n\) of \(n\) independent, identically distributed variables \(X\), with mean \(\mu\) and deviation \(\sigma\), once standardized, resembles a normal \(N\).

\[\dfrac{\bar X_n-\mu}{\sigma/\sqrt n}\ \xrightarrow{d}\ N(0,1)\]

More practice problems: central limit theorem

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