A Confidence interval provides additional information about variability.

It consists of an
interval of numbers along with a probability that the interval contains the unknown parameter
A point estimate of a parameter is a single sample value of a statistic that estimates the value
of the parameter.

The level of confidence in a confidence interval is a probability that represents the
percentage of intervals that will contain if a large number of repeated samples are obtained.
The level of confidence is denoted For example, a 95% level of confidence would mean that
if 100 confidence intervals were constructed, each based on a different sample from the same
population, we would expect 95 of the intervals to contain the population mean.
The general formula for all confidence intervals is:
Point Estimate (Critical Value)(Standard Error)

The construction of a confidence interval for the population mean depends upon three
factors-:
The point estimate of the population
The level of confidence
The standard deviation of the sample mean

Confidence Interval for
( Known)
95% of all sample means are in the interval

where X is the point estimate
Z(1.96) is the normal distribution critical value for a probability of o/2 in each tail
Levels Of Confidence













Sampling Distribution of the Mean







Ques 1 A sample of 11 circuits from a large normal population has a mean resistance of 2.20
ohms. We know from past testing that the population standard deviation is 0.35 ohms.
Determine a 95% confidence interval for the true mean resistance of the population


Confidence
Level
Confidence
Coefficient,

Z value
1.28
1.645
1.96
2.33
2.58
3.08
3.27
0.80
0.90
0.95
0.98
0.99
0.998
0.999
80%
90%
95%
98%
99%
99.8%
99.9%
o 1
/2 o /2 o
o 1
2.4068 1.9932
0.2068 2.20
) 11 (0.35/ 1.96 2.20
n

Z X
s s
=
=

Interpretation
We are 95% confident that the true mean resistance is between 1.9932 and 2.4068 ohms
Although the true mean may or may not be in this interval, 95% of intervals formed in this
manner will contain the true mean

Confidence Interval for
( Unknown)

Note:
If the population standard deviation is unknown, we can substitute the sample
standard deviation, S This introduces extra uncertainty, since S is variable from
sample to sample.So we use the t distribution instead of the normal distribution






The t value depends on degrees of freedom (d.f.)
Number of observations that are free to vary after sample mean has been calculated
d.f. = n 1


Example 2
A random sample of n = 25 taken from a normal population has X = 50 and S = 8. Form a
95% confidence interval for
n
S
t X
1 - n

2.0639 t
0.025,24 1 n , /2
= =
o
t
d.f. = n 1 = 24, so

The confidence interval is


46.698 53.302

Confidence Intervals for the Population Proportion,
An interval estimate for the population proportion ( ) can be calculated by adding and
subtracting an allowance for uncertainty to the sample proportion ( p )
SD of Interval



Sample Size



Upper and lower confidence limits for the population proportion are calculated with
the formula-:



where
Z is the standard normal value for the level of confidence desired
p is the sample proportion
n is the sample size
n
) (1

p
t t
=
n
p) p(1
25
8
(2.0639) 50
n
S
1 - n /2,
=
o
t X
n
p) p(1
Z p

Example 4 A random sample of 100 people shows that 25 are left-handed. Form a 95%
confidence interval for the true proportion of left-handers







Interpretation
We are 95% confident that the true percentage of left-handers in the population is
between 16.51% and 33.49%.

Sampling Error is the amount of imprecision in the estimate of the population parameter




To determine the required sample size for the mean, you must know:
The desired level of confidence (1 - o), which determines the critical Z value
The acceptable sampling error, e
The standard deviation,

s

If unknown, can be estimated when using the required sample size formula
Use a value for that is expected to be at least as large as the true
/100 0.25(0.75) 1.96 25/100
p)/n p(1 Z p
=

0.3349 0.1651
(0.0433) 1.96 0.25
s s
=
t
2
2 2

e
Z
n =
219.19
5
(45) (1.645)
2
2 2
2
2 2
= = =
e
Z
n
Select a pilot sample and estimate with the sample standard deviation, S





To determine the required sample size for the proportion, you must know:
The desired level of confidence (1 - o), which determines the critical Z value
The acceptable sampling error, e
The true proportion of successes,
can be estimated with a pilot sample, if necessary (or conservatively
use = 0.5)
Example 5
How large a sample would be necessary to estimate the true proportion defective in a large
population within 3%, with 95% confidence?
(Assume a pilot sample yields p = 0.12)

For 95% confidence, use Z = 1.96
e = 0.03
p = 0.12, so use this to estimate







2
2
e
) (1 Z
n

=
450.74
(0.03)
0.12) (0.12)(1 (1.96)
e
) (1 Z
n
2
2
2
2
=

=

Fundamentals of Hypothesis Testing: One-Sample Tests

A hypothesis is a claim (assumption) about a population parameter.
Population mean
Example: The mean monthly cell phone bill of this city is = $42
Population proportion
Example: The proportion of adults in this city with cell phones is = 0.68

Null Hypothesis states the claim or assertion to be tested
Example: The average number of TV sets in U.S. Homes is equal to three Ho: = 3
Begin with the assumption that the null hypothesis is true
Similar to the notion of innocent until
proven guilty
May or may not be rejected
Alternative hypothesis Hi Is the opposite of the null hypothesis
e.g., The average number of TV sets in U.S. homes is not equal to 3 ( H
1
: 3 )
May or may not be proven
Is generally the hypothesis that the researcher is trying to prove

Level of Significance, o
Defines the unlikely values of the sample statistic if the null
hypothesis is true
Defines rejection region of the sampling distribution
Is designated by o , (level of significance).Typical values are 0.01, 0.05, or
0.10

Type I Error
Reject a true null hypothesis
Considered a serious type of error
The probability of Type I Error is o,called level of significance of the test
Type II Error
Does Not reject a false null hypothesis
The probability of Type II Error is










Hypothesis Test for Mean







Actual
Situation
Decision
Do Not
Reject
H
0
No error
(1 - )
o
Type II Error
( )
Reject
H
0
Type I Error
( )
o
H
0
False H
0
True
No Error
( 1 - )
o Known o Unknown
Hypothesis
Tests for
(Z test)
(t test)

When SD Is Known (Z test )




For a two-tail test for the mean, known:
Convert sample statistic ( ) to test statistic (Z statistic )
Determine the critical Z values for a specified
level of significance o from a table or computer
Decision Rule: If the test statistic falls in the rejection region, reject H
0
; otherwise do
not reject H
0

Example
Test the claim that the true mean # of TV sets in US homes is equal to 3.
(Assume = 0.8)
H
0
: = 3 H
1
: 3 (This is a two-tail test)
Suppose that o = 0.05 and n = 100 are chosen for this test
is known so this is a Z test.
For o = 0.05 the critical Z values are 1.96
Suppose the sample results are
n = 100, X = 2.84 ( = 0.8 is assumed known)
So the test statistic is:




Since Z = -2.0 < -1.96, we reject the null hypothesis and conclude that there is sufficient
evidence that the mean number of TVs in US homes is not equal to 3
n

X
Z

=
2.0
.08
.16
100
0.8
3 2.84
n

X
Z =

=
p-Value Approach to Testing
p-value: Probability of obtaining a test statistic more extreme ( or > ) than the observed
sample value given H
0
is true
Also called observed level of significance. It is the smallest value of o for
which H
0
can be rejected
1)Convert Sample Statistic (e.g., ) to Test Statistic (e.g., Z statistic )
2)Obtain the p-value from a table
3)Compare the p-value with o
If p-value < o , reject H
0

If p-value > o , do not reject H
0

Example
How likely is it to see a sample mean of 2.84 (or something further from the mean, in
either direction) if the true mean is = 3.0?
X = 2.84 is translated to a Z score of Z = -2.0
p-value
= 0.0228 + 0.0228 = 0.0456
Compare the p-value with o
If p-value < o , reject H
0

If p-value > o , do not reject H
0

Here: p-value = 0.0456
o = 0.05
Since 0.0456 < 0.05, we reject the null hypothesis
Connecting the above to confidence interval
For X = 2.84, = 0.8 and n = 100, the 95% confidence interval is:


2.6832 2.9968 Since interval does not contain hypothesized mean 3.0 we
reject the null hypothesis at a=0.05
0.0228 2.0) P(Z
0.0228 2.0) P(Z
= >
= <
100
0.8
(1.96) 2.84 to
100
0.8
(1.96) - 2.84 +
One Tail Tests
H
1
: < 3
H
0
: 3 This is a lower/left-tail test since the alternative hypothesis is focused on the
lower/left tail below the mean of 3

H
1
: > 3
H
0
: 3 This is an upper/right-tail test since the alternative hypothesis is focused on the
upper/right tail above the mean of 3

Example Upper/Right-Tail Z Test
for Mean (o Known)
A phone industry manager thinks that customer monthly cell phone bills have
increased, and now average over $52 per month. The company wishes to test this
claim. (Assume o = 10 is known)




Suppose that o = 0.10 is chosen for this test thus Rejection region would be +1.28= 0.8997
from table
Suppose a sample is taken with the following results: n = 64, X = 53.1 (o=10 was assumed
known) Then the test statistic is:



Do not reject H
0
since Z = 0.88 1.28
i.e.: there is not sufficient evidence that the mean bill is over $ 52
Calculating P value



H
0
: 52 the average is not over $52 per month
H
1
: > 52 the average is greater than $52 per month

0.88
64
10
52 53.1
n

X
Z =

=
0.1894
0.8106 1 0.88) P(Z
64 10/
52.0 53.1
Z P
53.1) X P(
=
= > =
|
.
|

\
|
> =
>
Do not reject H
0
since p-value = 0.1894 > o = 0.10


t Test of Hypothesis for the Mean ( Unknown)

Example -The average cost of a hotel room in New York is said to be $168 per night.
A random sample of 25 hotels resulted in X = $172.50 and
S = $15.40. Test at the H
0
: = 168
o = 0.05 level. H
1
: 168

a = 0.05
n = 25
o is unknown, so use a t statistic
Critical Value: t
24
= 2.0639
Do not reject H
0
: not sufficient evidence that true mean cost is different than
$168
Connecting to confidence interval
For X = 172.5, S = 15.40 and n = 25, the 95% confidence interval is:
172.5 - (2.0639) 15.4/ 25 to 172.5 + (2.0639) 15.4/ 25

166.14 178.86
Since this interval contains the Hypothesized mean (168), we do not reject the null
hypothesis at o = 0.05
Proportions
Sample proportion in the success category is denoted by p



n
S
X
t
1 - n

=
1.46
25
15.40
168 172.50
n
S
X
t
1 n
=

size sample
sample in successes of number
n
X
p = =
When both n and n(1-) are at least 5, p can be approximated by a normal distribution
with mean and standard deviation



The sampling distribution of p is approximately normal, so the test statistic is a Z
value:






Example
A marketing company claims that it receives 8% responses from its mailing. To test this
claim, a random sample of 500 were surveyed with 25 responses. Test at the o = 0.05
significance level.
Check:
n = (500)(.08) = 40 H
0
: = 0.08
n(1-) = (500)(.92) = 460 Hi:Y=/o.o8




There is sufficient evidence to reject the companys claim of 8% response rate.
p-Value Solution


Reject Ho since p-value=0.0136<a=0.05
t = p
n
) (1

t t
=
p
n
) (1
p
Z

=
2.47
500
.08) .08(1
.08 .05
n
) (1
p
Z =

=
t t
t
0.0136 2(0.0068)
2.47) P(Z 2.47) P(Z
= =
> + s



University of the
Fraser Valley
Assignment Chapter 8&9
Presented To Prof Gagan Sharma

Presented By Shrey Budhiraja
200106769