Chapter Topics

Estimation process
Point estimates
Interval estimates
Confidence interval estimation for the
mean ( known)
Determining sample size
Confidence interval estimation for the
mean ( unknown)
Confidence interval estimation for the
proportion
o
o
Estimation Process
Mean, , is
unknown
Population
Random Sample
Mean
X = 50
Sample
I am 95%
confident that
is between 40
& 60.
Point Estimates
Estimate Population
Parameters
with Sample
Statistics
Mean
Proportion
Variance
Difference

p
2
o
1 2

X
S
P
2
S
1 2
X X
Interval Estimates
Provides range of values
Take into consideration variation in
sample statistics from sample to
sample
Based on observation from 1 sample
Give information about closeness to
unknown population parameters
Stated in terms of level of confidence
Never 100% sure
Confidence Interval Estimates


Mean
o
Unknown
Confidence
Intervals
Proportion
o
Known
Elements of
Confidence Interval Estimation
Level of confidence
Confidence in which the interval will
contain the unknown population
parameter
Precision (range)
Closeness to the unknown parameter
Cost
Cost required to obtain a sample of
size n
Level of Confidence
Denoted by
A relative frequency interpretation
In the long run, of all the
confidence intervals that can be
constructed will contain the unknown
parameter
A specific interval will either contain or
not contain the parameter
No probability involved in a specific interval
( )
100 1 % o
( )
100 1 % o
Interval and Level of
Confidence
Confidence Intervals
Intervals
extend from

to



of intervals
constructed
contain ;
do
not.
_
Sampling Distribution of the Mean
X
X Zo
X
o
/ 2 o
/ 2 o
X
X
=
1 o
X
X Zo +
( )
100 1 % o

100 % o
/ 2
X
Z
o
o +
/ 2
X
Z
o
o
Confidence Interval for
( Known)
Assumptions
Population standard deviation is
known
Population is normally distributed
If population is not normal, use large
sample
Confidence interval estimate

o
/ 2 / 2
X Z X Z
n n
o o
o o
s s +
Assumptions
Population standard deviation is unknown
Population is normally distributed
If population is not normal, use large
sample
Use Students t Distribution
Confidence Interval Estimate

Confidence Interval for
( Unknown)

o
/ 2, 1 / 2, 1 n n
S S
X t X t
n n
o o

s s +
Degrees of Freedom (df )
Number of observations that are free
to vary after sample mean has been
calculated
Example
Mean of 3 numbers is 2
degrees of freedom
= n -1
= 3 -1
= 2
1
2
3
1 (or any number)
2 (or any number)
3 (cannot vary)
X
X
X
=
=
=
Students t Table
Upper Tail Area
df .25 .10
.05
1 1.000 3.078 6.314
2
0.817 1.886 2.920
3 0.765 1.638 2.353
t
0
2.920
t Values
Let: n = 3
df = n - 1 = 2
o = .10
o/2 =.05
o / 2 = .05
Example
A random sample of 400 Voters showed 32
preferred Candidate A. Set up a 95%
confidence interval estimate for p.
( ) ( )
( ) ( )
/ /
1 1
.08 1 .08 .08 1 .08
.08 1.96 .08 1.96
400 400
.053 .107
s s s s
s s
p p p p
p Z p p Z
n n
p
p
o o 2 2

s s +

s s +
s s
Example
A random sample of 25 has 50 and 8.
Set up a 95% confidence interval estimate for
n X S

= = =
/ 2, 1 / 2, 1
8 8
50 2.0639 50 2.0639
25 25
46.69 53.30
n n
S S
X t X t
n n
o o

s s +
s s +
s s
Confidence Interval
Estimate for Proportion
Assumptions
Two categorical outcomes
Population follows binomial distribution
Normal approximation can be used if
and
Confidence interval estimate

5 np >
( )
1 5 n p >
( ) ( )
/ 2 / 2
1 1
S S S S
S S
p p p p
p Z p p Z
n n
o o

s s +