Wijianto

2001920711
STAT8097 Business Statistics
Forum Discussion
Session 4 – Confidence Interval Estimation (Chapter 7, 8)
==================================================================
Attention:
1. Please submit your answer in a PDF format instead of Word Document.
2. Please put your name inside your answer document.
3. Please use manual calculation to answer the forum questions and show the formulas
you use for the answers. You may use PHStat only to verify your manual calculation.
4. Please ensure that you have uploaded the correct file, and that the file has been
succesfully uploaded into the forum. If you fail to do so, you are given a chance to re-
upload your file, but you cannot get the full score once I have posted the feedback.
==================================================================

Question 1
A random sample of 70 observations from a normally distributed population possesses a mean
equal to 26.2 and a standard deviation equal to 4.1.
a. Find a 95% confidence interval for the mean.
b. Find a 99% confidence interval for the mean.
c. What happens to the width of a confidence interval as the value of the confidence
coefficient is increased while the sample size is held fixed?
d. Would your confidence intervals of part a and part b be valid if the distribution of the
original population was not normal? Please give your explanation.

(a) Mean = 26.2

σ = 4.1
n = 70
c = 95% = 0.95
For confidence level 1-α=0.95, determine Zα/2=Z0.025 using standardized normal
probability table, which is the Z-score corresponding to a probability of 0.5 - α/2=
0.475
Zα/2 = 1.96
The margin of error is then:
Zα 𝜎 4.1
𝐸= 𝑥 = 1.96 𝑥 ≈ 0.9604
2 √𝑛 √70
The boundaries of the confidence interval then become
𝑀𝑒𝑎𝑛 − 𝐸 = 26.2 − 0.9604 = 𝟐𝟓. 𝟐𝟑𝟗𝟔
𝑀𝑒𝑎𝑛 + 𝐸 = 26.2 + 0.9604 = 𝟐𝟕. 𝟏𝟔𝟎𝟒
For a 95% confidence interval are 25.2396 to 27.1604

(b) C=99% = 0.99

For confidence level 1-α=0.99, determine Zα/2=Z0.005 using standardized normal
probability table, which is the Z-score corresponding to a probability of 0.5 - α/2=
0.495
Zα/2 = 2.575
Note: I use the average of 2.57 and 2.58, and because 0.495 lies exactly in the
middle
Wijianto
2001920711
The margin of error is then:
Zα 𝜎 4.1
𝐸= 𝑥 = 2.575 𝑥 ≈ 1.2618
2 √𝑛 √70
The boundaries of the confidence interval then become
𝑀𝑒𝑎𝑛 − 𝐸 = 26.2 − 1.2618 = 24.9382
𝑀𝑒𝑎𝑛 + 𝐸 = 26.2 + 1.2618 = 27.4618
For a 99% confidence interval are 24.9382 to 27.4618

(c) As the confidence coefficient increases, the confidence interval becomes wider
(because to confirm to be more confident that the confidence interval contains the
true population mean )

(d) Yes, because the central limit theorem tells that the sampling distribution of the
sample mean is approximately normal if the sample is large (n ≥ 30).

Question 2
The following sample of 16 measurements was selected from a population that is
approximately normally distributed.
91 95 106 100
80 106 100 83
99 78 97 115
110 121 82 104

a. Construct an 80% confidence interval for the population mean.

b. Construct a 95% confidence interval for the population mean and compare the width
of this interval with that of part a.
c. Carefully interpret each of the confidence intervals and explain why the 80%
confidence interval is narrower.

Answer
(a) n = 16
mean = jumlah seluruh data / jumlah data
mean = 1567/16
mean = 97.93
standard deviation =

ሺ91−97.93ሻ+ሺ80−97.93ሻ… 2398.93
=√ 16−1
=√ 15

= 12.64

For 80% confidence level

For confidence level 1-α=0.80 determine Zα/2=Z0.1 using standardized normal
probability table, which is the Z-score corresponding to a probability of 0.5 - α/2=
0.10
Zα/2 = 1.28
Wijianto
2001920711

The margin of error is then:

Zα 𝜎 12.64
𝐸= 𝑥 = 1.28 𝑥 ≈ 4.0448
2 √𝑛 √16
The boundaries of the confidence interval then become
𝑀𝑒𝑎𝑛 − 𝐸 = 97.93 − 4.0448 = 93.8852
𝑀𝑒𝑎𝑛 + 𝐸 = 97.93 + 4.0448 = 101.9748
For a 80% confidence interval for population mean are 93.8852 to 101.9748

(b) For 95% confidence level

For confidence level 1-α=0.95 determine Zα/2=Z0.025 using standardized normal
probability table, which is the Z-score corresponding to a probability of 0.5 - α/2=
0.475

Zα/2 = 1.96

The margin of error is then:

Zα 𝜎 12.64
𝐸= 𝑥 = 1.96 𝑥 ≈ 6.1936
2 √𝑛 √16
The boundaries of the confidence interval then become
𝑀𝑒𝑎𝑛 − 𝐸 = 97.93 − 6.1936 = 91.7364
𝑀𝑒𝑎𝑛 + 𝐸 = 97.93 + 6.1936 = 104.1236
For a 95% confidence interval for population mean are 91.7364 to 104.1236
If we compare with the part data in a it more wider the range

CI = 80% 93.88 101.97

91.73 104.12
CI = 95%

(c) As the confidence coefficient increases, the confidence interval becomes wider
(because 80% is the lower level that to confirm to be Not confident enough to guess
the true population mean.

Question 3
“Made in Indonesia” is a claim in many product advertisements or on product labels.
Advertisers want consumers to believe that the product is manufactured with 100%
Indonesian labor and materials – which is often not the case. A study was conducted to
determine what “Made in Indonesia” means to consumers. The survey asked consumers’
opinions of the percentage of Indonesian labor and materials in products that have “Made in
Indonesia” labels. Of 106 shoppers at a shopping mall in Yogyakarta, 64 shoppers answered
“100%”.
Wijianto
2001920711
a. What is the point estimate of the corresponding proportion of consumers who believe
that “Made in the Indonesia” means 100% Indonesian labor and materials?
b. Using a 90% confidence interval, estimate the true proportion of consumers who
believe that “Made in the Indonesia” means 100% Indonesian labor and materials.
c. Give a practical interpretation of the interval in part b.

Answer
(a) Sample = 106 shoppers
x = 64 Shopper
so ῤoint estimates = 64/106 = 0.603= 60.3%
(b) With CI 90% the true proportion of customer who believe that “made in the
Indonesia” means 100% labor and maerials
For confidence level 1-α=0.90 determine Zα/2=Z0.050 using standardized normal
probability table, which is the Z-score corresponding to a probability of 0.5 -
α/2= 0.450

Zα/2 = 1.645
Point estimate (p) = 60.3%
q = 39.7%

The margin of error is then:

𝐙𝛂
𝑬= 𝒙ඥሺ𝒑 𝒒ሻ /𝒏 = 𝟏. 𝟔𝟒𝟓 𝒙 ඥሺ𝟔𝟎. 𝟑 ∗ 𝟑𝟗. 𝟕ሻ /𝟏𝟎𝟔 ≈ 𝟕. 𝟖𝟏𝟕𝟒
𝟐
64 - 7.8 = 56.2 = 56
64 + 7.8 =71.8 = 72

It means For a 90% confidence interval for true proportion of customer who
believe that “made in the Indonesia” means 100% labor and materials are 56 to
72 shopper.

(c) The Interpretation of the interval in part be would be that “We 90% Confident
that the customers who believe that “Made in the Indonesia” means 100% labor
and materials are 56 shopper until 72 shopper”.