§Week 10

Confidence Intervals

Week 10 - Confidence Intervals

1
 § 6 - Confidence Intervals

Week 10 - Confidence Intervals

2
 § 6.1
Confidence Intervals for
the Mean (Large
3 Samples)

Week 10 - Confidence Intervals

3
Point Estimate for Population μ
A point estimate is a single value estimate for a population parameter. The most unbiased
point estimate of the population mean, , is the sample mean,

x.
Example:
A random sample of 32 textbook prices (rounded to the nearest dollar) is taken from a
local college bookstore. Find a point estimate for the population mean, .

34 34 38 45 45 45 45 54
56 65 65 66 67 67 68 74
79 86 87 87 87 88 90 90 x  74.22
94 95 96 98 98 101 110 121

The point estimate for the population mean of textbooks in the bookstore is $74.22.

4
Interval Estimate
An interval estimate is an interval, or range of values, used to estimate a population
parameter.

Point estimate for

textbooks

•
74.22

interval estimate

How confident do we want to be that the interval estimate contains the population mean,
μ?

5
Level of Confidence
The level of confidence c is the probability that the interval estimate contains the
population parameter.

c is the area beneath the

c normal curve between the
critical values.

1 1
(1 – c) (1 – c)
2 2
z
 zc z=0 zc
Use the Standard Normal
Critical values Table to find the
corresponding z-scores.
The remaining area in the tails is 1 – c .
Z-score table is needed in this calculation --- see - http://www.z-table.com/
6
Common Levels of Confidence
If the level of confidence is 90%, this means that we are 90% confident that the interval
contains the population mean, μ.

The Bell curve area = 1

0.90 Shaded area = 0.9
Reminder area = 1- 0.9 = 0.1

0.05 0.05

z
zc = 1.645
zc z=0 zc = z1.645
c

The corresponding z-scores are ± 1.645.

7
Common Levels of Confidence
If the level of confidence is 95%, this means that we are 95% confident that the interval
contains the population mean, μ.

Area for 95% level of

0.95 confidence = 0.95 + 0.025
= 0.9750

0.025 0.025

z
zc =  z1.96
c
z=0 zc =z1.96
c

The corresponding z-scores are ± 1.96.

8
Common Levels of Confidence
If the level of confidence is 99%, this means that we are 99% confident that the interval
contains the population mean, μ.

Area for 99% = 0.99 + 0.005 = 0.995

0.99

0.005 0.005

z
zc = 2.575
zc z=0 zc = z2.575
c

The corresponding z-scores are ± 2.575.

9
Margin of Error
The difference between the point estimate and the actual population parameter value is
called the sampling error.

When μ is estimated, the sampling error is the difference μ – . Since μ x

is usually
unknown, the maximum value for the error can be calculated using the level of confidence.

Given a level of confidence, the margin of error (sometimes called the maximum error of
estimate or error tolerance) E is the greatest possible distance between the point estimate
and the value of the parameter it is estimating.

σ
E  z cσ x  z c
n When n  30, the sample standard
deviation, s, can be used for .

10
11
Margin of Error
Example:
A random sample of 32 textbook prices is taken from a local college bookstore. The mean
x deviation is s = 23.44.
of the sample is = 74.22, and the sample standard
Use a 95% confidence level and find the margin of error for the mean price of all textbooks
in the bookstore.

Since n  30, s can be substituted for σ.

σ 23.44
E  zc  1.96 
n 32
 8.12

We are 95% confident that the margin of error for the population mean (all the textbooks
in the bookstore) is about $8.12.

Week 10 - Confidence Intervals

11
12
Confidence Intervals for μ
A c-confidence interval for the population mean μ is
xE  xE
The probability that the confidence interval contains μ is c.

Example:
A random sample of 32 textbook prices is taken from a local college bookstore. The
x
mean of the sample is = 74.22, the sample standard deviation is s = 23.44, and the
margin of error is E = 8.12.

Construct a 95% confidence interval for the mean price of all textbooks in the bookstore.

Week 10 - Confidence Intervals

Continued.

12
13
Confidence Intervals for μ
Example continued:
Construct a 95% confidence interval for the mean price of all textbooks in the bookstore.

x = 7 4 .2 2 s = 23.44 E = 8.12

Left endpoint = ? Right endpoint = ?

• x = •7 4 .2 2 •
x  E  74.22  8.12 x  E  74.22  8.12
= 66.1 = 82.34

With 95% confidence we can say that the cost for all textbooks in the bookstore is
between $66.10 and $82.34.
Week 10 - Confidence Intervals

13
 Finding Confidence Intervals for μ
14
Finding a Confidence Interval for a Population Mean (n  30 or σ known with a
normally distributed population)

In Words In Symbols
1. Find the sample statistics n and x. x
x 
n
2. Specify , if known. Otherwise, if n  30, find
( x  x )2
the sample standard deviation s and use it as an s 
n 1
estimate for .
3. Find the critical value zc that corresponds to the Use the Standard
given level of confidence. Normal Table.
σ
E  zc
4. Find the margin of error E. n

5. Find the left and right endpoints Left en dpoin t : x  E

and form
Righ t en dpoin t : x  E
the confidence interval. In t erva l: x  E    x  E
Week 10 - Confidence Intervals

14
15 Confidence Intervals for μ ( Known)
Example:
A random sample of 25 students had a grade point average with a mean of 2.86. Past
studies have shown that the standard deviation is 0.15 and the population is normally
distributed.
Construct a 90% confidence interval for the population mean grade point average.

n = 25 x = 2 .8 6  = 0.15
σ 0.15
zc = 1.645 E  zc  1.645   0.05
n 25
x  E  2 .8 6 ± 0 .0 5 2.81 < μ < 2.91

With 90% confidence we can say that the mean grade point average for all
students
Weekin the population
10 - Confidence Intervals is between 2.81 and 2.91.
15
16
Exercise

Week 10 - Confidence Intervals

16