UNDERSTANDING CONFIDENCE

INTERVAL ESTIMATES FOR THE

POPULATION MEAN
Objectives
• define confidence level;
• define confidence interval;
• apply normal curve concepts in computing the
interval estimate; and
• compute confidence interval estimates.
 An interval estimate, called a confidence interval, is a range of values
that is used to estimate a parameter. This estimate may or may not contain
the true parameter value.

In determining an interval estimate, a degree of confidence

(expressed as a percentage such as 95%) that the interval contains the true
and fixed parameter is made. That is, if we collect several random samples
and then calculate a confidence interval from each sample, these confidence
intervals are constructed wide enough so that 95% of them contain the true
population parameter and 5% do not. The value 95% is also known as the
confidence level.
There are three commonly used confidence intervals:
90%, 95%, and 99% confidence intervals. Shorter
intervals are more informative than longer ones. A short
confidence interval can be obtained by having a large
sample or by using a lower confidence level.
 90% confidence level
Thus, when the 90% confidence level is
adopted, the interval estimate or
confidence interval is
𝜎 𝜎
𝑥𝑥 − 1.65 𝑡𝑜 𝑥𝑥 + 1.65
𝑛 𝑛
 95% confidence level
Thus, when the 95% confidence level is
adopted, the interval estimate or
confidence interval is
𝜎 𝜎
𝑥𝑥 − 1.96 𝑡𝑜 𝑥𝑥 + 1.96
𝑛 𝑛
 99% confidence level
Thus, when the 99% confidence level is
adopted, the interval estimate or
confidence interval is
𝜎 𝜎
𝑥𝑥 − 2.58 𝑡𝑜 𝑥𝑥 + 2.58
𝑛 𝑛
Note:
1. We use the symbol 𝜶(alpha) to refer to the area outside the
confidence level.
2. The general formula in computing the confidence interval or interval
estimate is
𝜎 𝜎
𝑥𝑥 − 𝑧 𝛼
2
< 𝜇 < 𝑥𝑥 + 𝑧 𝛼
2
.
𝑛 𝑛
𝜎
3. Margin of error : E = 𝑧𝛼 2
𝑛
Example:
1. A random sample of 100 students are asked how much they spend for a
meal during weekdays. The average expense is found to be Php 75. Past
experience has revealed that the population standard deviation is Php 5. Find
the point estimate and interval estimate of the population mean, using the
95% confidence level.
Solution:
Point Estimate: The point estimate for the population mean 𝜇 is 75 (the
sample mean).
General formula in computing confidence interval:

𝜎 𝜎
𝑥𝑥 − 𝑧𝛼 < 𝜇 < 𝑥𝑥 + 𝑧𝛼
2 𝑛 2 𝑛

where:

𝑥𝑥 = 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑚𝑒𝑎𝑛 𝑛 = 𝑠𝑎𝑚𝑝𝑙𝑒 𝑠𝑖𝑧𝑒

𝜎
𝜎 = 𝑠𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑑𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 𝑧𝛼 2 = 𝑚𝑎𝑟𝑔𝑖𝑛 𝑜𝑓 𝑒𝑟𝑟𝑜𝑟
𝑛
95% confidence interval
STEPS
1. Determine the confidence coefficient. The confidence interval is 1.96.

2. Find the maximum error E. 𝜎

E = 𝑧𝛼 2 𝑛
5
= 1.96
100
5
= 1.96
10
= 1.96 0.5
= 0.98

3. Find the lower and upper confidence 𝜎 𝜎

𝑥𝑥 − 1.96 < 𝜇 < 𝑥𝑥 + 1.96
limits. 𝑛 𝑛
5 5
𝑥𝑥 − 1.96 < 𝜇 < 𝑥𝑥 + 1.96
100 100
75 − 0.98 < 𝜇 < 75 + 0.98

74.02 𝑡𝑜 75.98

4. Describe the results. We can say with 95% confidence that the
interval between 74.02 and 75.98 contains
the mean 𝜇 based on the sample size of 100.
2. Given the information: n = 50; 𝜎 = 0.5 and 𝑥𝑥 = 18. Find (a) the best point estimate of
the population mean and (b) the 90% confidence interval of the population mean.

Solution:

Point Estimate: The point estimate for the population mean 𝜇 is 18 (the sample mean).
90% confidence interval
STEPS
1. Determine the confidence coefficient. The confidence interval is 1.65.

2. Find the maximum error E. 𝜎

E = 𝑧𝛼 2
𝑛
0.5
= 1.65
50
= 0.12

3. Find the lower and upper confidence 𝜎 𝜎

𝑥𝑥 − 1.65 < 𝜇 < 𝑥𝑥 + 1.65
limits. 𝑛 𝑛
0.5 0.5
𝑥𝑥 − 1.65 < 𝜇 < 𝑥𝑥 + 1.96
50 50
18 − 0.12 < 𝜇 < 18 + 0.12

17.88 𝑡𝑜 18.12

4. Describe the results. We can say with 90% confidence that the
interval between 17.88 and 18.12 contains
the mean 𝜇 based on the sample size of
50.
Exercises:

1. Given the information: n = 20; 𝜎 = 3 and 𝑥𝑥 = 36.5. Find (a)

the best point estimate of the population mean and (b) the 95%
confidence interval of the population mean.
Exercises:

2. Given the information: n = 58; 𝜎 = 10 and 𝑥𝑥 = 75.

Find the 99% confidence interval of the population mean.
Exercises:

3. A sample of 60 students’ ages was obtained to estimate

the mean age of all Grade 9 students. 𝑥𝑥 = 15 years and
the population variance is 16.

a. Find the 90% confidence interval for 𝜇.

b. Find the 95% confidence interval for 𝜇.
c. Find the 99% confidence interval for 𝜇.