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• Normal distribution.
• Standard normal distribution.
OBJECTIVES
At the end of this lesson the student will be able to
1. Define the following terms
• Point Estimate.
• Confidence Interval
• Confidence Level
• Estimate
• Estimation
• Estimator
• Null hypothesis
• Alternative hypothesis
• Critical value or critical point
• Observed value of 𝑧 or 𝑡 .
• One-tailed test
• Right tailed test.
• Two-tailed test.
• Significance level.
• Type I error.
• Type II error.
SAMPLING DISTRIBUTION
A SAMPLE SURVEY:
The technique of collecting information from a portion of the population is called a sample
survey.
Population Distribution
The population distribution is the probability distribution of the population data
EXAMPLE (1)
• Suppose there are only five employees working for a small company. The
following give the annual salaries (in thousands of dollars) of these five
employees.
17 24 35 35 43
- Find the frequency distribution of the annual salaries.
- Find the probability distribution.
SOLUTION
EXAMPLE (2)
A population consists of the following four values: 2, 2, 4 and 6:
• List all samples of size 2, and compute the mean of each sample.
• Compute the mean of the distribution of sample means and the population
mean compare the two values.
SOLUTION
𝑿: 2, 2, 4, and 6
Sample Values Mean
1 2,2 2+2 2+2+4+6
=2 𝜇= = 3.5
2 4
2 2,4 2+4
=3 σ 𝑋ത
2 𝑋ത = =
𝑁𝑜 𝑜𝑓 𝑠𝑎𝑚𝑝𝑙𝑒𝑠
3 2,6 2+6
=4
2
2 + 3 + 4 + 3 + 4 + 5 21
4 2,4 2+4 = = 3.5
=3 6 6
2
5 2,6 2+6 𝑋ത = 𝜇
=4
2
6 4,6 6+4
=5
2
ESTIMATION
The estimation procedure involves the following steps
- Select a sample
Population Sample
- Collect the required information from the members of the sample.
- Calculate the value of the sample statistic. mean 𝜇 𝑋ത
- Assign value(s) to the corresponding population parameter. S.D 𝜎 𝑆
Estimation
The value(s) assigned to a population parameter based on the value of a sample statistic is
called an estimate. The sample statistic used to estimate a population parameter is called an
estimator.
ESTIMATION
Point Estimate
Interval Estimate
The interval estimation, an interval is constructed around the point estimate, and it is
stated that this interval is likely to contain the corresponding population parameter.
Confidence Interval For 𝝁 For Large Samples
The confidence interval for 𝝁 is
ഥ ± 𝒛𝝈ഥ𝒙
𝒙 if 𝝈 is known
ഥ ± 𝒛𝒔ഥ𝒙
𝒙 if 𝝈 is not known
𝝈 𝒔
where 𝝈ഥ𝒙 = 𝒂𝒏𝒅 𝒔ഥ𝒙 =
𝒏 𝒏
The value of z used here is read from the standard normal distribution
table for the given confidence interval.
EXAMPLE (3)
A sample of 81 observations is taken from a normal population. The sample mean is 40 and
the sample standard deviation is 5. Determine 95% confidence (Z=1.96) interval for the
population mean.
Solution
𝑛 = 81, 𝑥ҧ = 40, 𝑠 = 5, 𝑧 = 1.96
95% confidence interval of the population mean is given by
𝑠
𝑥ҧ ± 𝑧
√𝑛
𝑠 5
𝑥ҧ + 𝑧 = 40 + 1.96 = 40 + 1.089 = 41.08 𝑎𝑠 𝑎𝑛 𝑢𝑝𝑝𝑒𝑟 𝑙𝑖𝑚𝑖𝑡
√𝑛 √81
𝑠 5
𝑥ҧ − 𝑧 = 40 − 1.96 = 40 − 1.089 = 38.91 𝑎𝑠 𝑎 𝑙𝑜𝑤𝑒𝑟 𝑙𝑖𝑚𝑖𝑡
𝑛 81
WHAT IS A HYPOTHESIS?
A Hypothesis is a statement about the value of a population
are:
Alternative Hypothesis
A Type I error occurs when a true null hypothesis is rejected. The value of 𝛼 represents the
probability of committing this type of error. The value of 𝛼 represents the significance level of
the test.
Type II Error
A Type II error occurs when a false null hypothesis is not rejected. The value of
𝛽 represents the probability of committing a type II error.
Two-tailed test Left-tailed test Right-tailed test
Rejection region In both tails In the left tail In the right tail
STEPS OF TESTING OF HYPOTHESIS
Step 1: State the null hypothesis 𝑯𝟎 and the alternate hypothesis 𝑯𝟏 .
= 16
20
SOLUTION
Step 1: State the null hypothesis and the alternate hypothesis.
H0: = 200
H1: ≠ 200
(note: keyword in the problem “has changed”)
Z Z /2
x −
Z /2
/ n 0.4950 0.4950
203.5 − 200
Z .01/2
16 / 50
1.55 is not 2.58 Do not reject 𝐻0
Step 5: Make a decision and interpret the result.Because 1.55 does
not fall in the rejection region, H0 is not rejected. We conclude that
the population mean is not different from 200. So we would report
to the vice president of manufacturing that the sample evidence does
not show that the production rate at the Fredonia Plant has changed
from 200 per week.
EXAMPLE
• The following data represents the results of a sample drawn
from a production line and the administration wishes to test
that the average number of units varies of 60 where