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Chapter 7 Estimation PDF
Chapter 7 Estimation PDF
C O UR S E : B US I N E S S S T A T I S T I C S 1 (Q M M 1 0 2 )
Sample
Proportion p p̂
n
Variance σ2 s 2 1
i x x 2
n 1 i 1
A specific interval either will contain or will not contain the true parameter
◦ No probability involved in a specific interval
Population Population
Mean Proportion
σ Known σ Unknown
α α
0.025 0.025
2 2
IC1 ( ) X z / 2 , X z / 2
n n
X
◦ is the point estimate
◦ zα/2 is the normal distribution critical value for a probability of /2 in each tail
◦ σ/ n is the standard error
Confidence
Confidence Level
Coefficient, Zα/2 value
1
80% 0.80 1.28
90% 0.90 1.645
95% 0.95 1.96
98% 0.98 2.33
99% 0.99 2.58
99.8% 0.998 3.08
99.9% 0.999 3.27
BUSINESS STATISTICS II (FALL 2016-17) 25
Intervals and Level of Confidence Sampling Distribution
of the Mean
/2 1 /2
Intervals x
extend from μx μ (1-)x100%
x1 of intervals constructed
σ contain μ;
X Zα / 2 x2
n ()x100% do not.
to
σ
X Zα / 2
n
Confidence Intervals
Solution:
σ
X Zα/2
n
2.20 1.96 (0.35/ 11 )
2.20 0.2068
1.9932 μ 2.4068
Chap 8-33
BUSINESS STATISTICS II (FALL 2016-17)
Chap 8-33
Application
Keller (2012), p. 347
The sponsors of television shows targeted at the children’s
market wanted to know the amount of time children spend
watching television because the types and number of
programs and commercials are greatly influenced by this
information.
As a result, it was decided to survey 100 North American
children and ask them to keep track of the number of hours of
television they watch each week
Solution
Population Population
Mean Proportion
σ Known σ Unknown
S
(where tα/2 is the critical value of the t distribution with n -1 degrees of freedom
and an area of α/2 in each tail) X tα / 2
n
d.f. = n - 1
Let X1 = 7
Let X2 = 8
What is X3? If the mean of these three values is 8.0,
then X3 must be 9
(i.e., X3 is not free to vary)
t (df = 13)
t-distributions are bell-shaped
(unimodal) and symmetric, but
have ‘fatter’ tails than the t (df = 5)
normal. Its mean is equal to 0
0 t
BUSINESS STATISTICS II (FALL 2016-17) 44
Student’s t Distribution
t distribution – flatter in middle and have more
area in their tails than the normal distribution
◦ t distribution approach the normal curve as n becomes larger
◦ t distribution is to be used when the population variance or population Std Dev is unknown,
regardless of the size of the sample
Note: t Z as n increases