IPS

Interval estimator - properties

• For a given level of confidence 1 − α = 0.95, the CI should be

narrowest, i.e., the margin of error should be smallest.

W U −L
E= =
2 2

e.g., which of the following 95% CI of p is the most informative?

– (0.41, 0.64)
– (0.32, 0.78)
– (0.10, 0.93)

Pritam Ranjan / OM&QT 41

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Sample Size

• Example: FDA needs to estimate the average content of an additive in

a given food product with margin of error E = 0.1 grams and 95% level
of confidence. How many random samples of the product have to be
tested, if it is known that σ = 0.5 grams?

What if we wanted the margin of error to be most E = 0.01 grams?

What if σ is not known but the prior estimate gives s = 0.5 grams?

Pritam Ranjan / OM&QT 42

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Exercise
Match each item on the left with its correct description on the right.

Pritam Ranjan / OM&QT 43

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Exercise (True/False)
1. All other things the same, a 90% confidence interval is shorter than a 95%
confidence interval.

2. Ninety-five percent z-intervals have the form of a statistic plus or minus 3

standard errors of the statistic.

3. By increasing the sample size from n = 100 to n = 400, we can reduce the
margin of error by 50%.

4. If we double the sample size from n = 50 to n = 100, the length of the confidence
interval is reduced by half.

5. If the 95% confidence interval for the average purchase of customers at a

department store is $50 to $110, then $100 is a plausible value for the population
mean at this level of confidence.

6. If the 95% confidence interval for the number of moviegoers who purchase from
the concession stand is 30% to 45%, then fewer than half of all moviegoers do
not purchase from the concession stand.

Pritam Ranjan / OM&QT 44

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Homework

• Next: Hypothesis testing

• Finish unsolved examples from lecture notes, textbook, problem set.

Pritam Ranjan / OM&QT 45