Estimation and Confidence Interval

Business Statistics -2010

Dr. Gunjan Malhotra
Assistant Professor
gmalhotra@imt.edu mailforgunjan@gmail.com

‡ Determining the Required Sample Size .Confidence Intervals ‡ Confidence Intervals for the Population Mean. ± when Population Standard Deviation is Known ± when Population Standard Deviation is Unknown ‡ Confidence Intervals for the Population Proportion.

‡ a confidence interval provides additional information about variability Lower Confidence Limit Point Estimate Width of confidence interval Upper Confidence Limit .Point and Interval Estimates ‡ A point estimate is a single number.

Confidence Intervals Confidence Intervals Population Mean Known Unknown Population Proportion .

Factors Affecting Confidence Interval Estimates The factors that determine the width of a confidence interval are: 1. usually estimated by s. 2. .The sample size.The variability in the population. 3. n.The desired level of confidence.

The t distribution is more spread out and flatter at the center than the standard normal distribution As the sample size increases. It is. bell-shaped and symmetrical. There is not one t distribution. a continuous distribution. n. the t distribution approaches the standard normal distribution. like the z distribution. like the z distribution.Characteristics of the t-distribution 1. 4. All t distributions have a mean of 0. but rather a family of t distributions. but their standard deviations differ according to the sample size. 2. It is. 3. . however.

7 . Use t-distribution If the population standard deviation is unknown and the sample is less than 30.Confidence Interval Estimates for the Mean Use Z-distribution If the population standard deviation is known or the sample is greater than 30.

Confidence Interval for a Population Proportion The confidence interval for a population proportion is estimated by: ps z pq n .

05.Finite-Population Correction Factor ‡ If n/N < . the FPC factor may be ignored. Standard Error of the Sample Mean Standard Error of the Sample Proportion pq n N n N 1 W Wx ! n N n N 1 Wp ! .

I. for the Proportion pq N  n ps z n N 1 .I.Confidence Interval Formulas for Estimating Means and Proportions with Finite Population Correction C.I. for the Mean (Q) W N n X sz n N 1 s N n X st n N 1 C. for the Mean (Q) C.

Selecting a Sample Size 3 factors that determine the size of a sample: ‡ The degree of confidence selected. . ‡ The variation in the population. ‡ The maximum allowable error.

value correspond ing to the selected level o con idence s .the sample deviation 2 .the allowable error z .Sample Size Determination for a Variable ¨ z™s ¸ n!© ¹ ª E º where : E .the z .

the z .the maximum allo able error 2 . 0.Sample Size for Proportions ¨Z¸ n ! pq© ¹ ªEº here : p is estimate from a study or some source.50 is used z .value for the desired confidence level E . other ise.

48 Pg 322 Q 62 . 14 Pg 312 Q 16.Practice problems ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Lind Pg 301 Q 2 Pg 302 Q 8 Pg 309 Q 12. 22 Pg 317 Q 26 . 28 Pg 319 Q 34 Pg 320 Q 44. 18 Pg 314 Q 20.

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