Bus 273-274 Chapter 6

Statistics for
Business and Economics

8th Global Edition
Chapter 6
Distributions of Sample
Statistics
Copyright © 2013 Pearson Education Ch. 6-1
Chapter Goals
After completing this chapter, you should be able to:
 Describe a simple random sample and why sampling is
important
 Explain the difference between descriptive and
inferential statistics
 Define the concept of a sampling distribution
 Determine the mean and standard deviation for the
sampling distribution of the sample mean, X

 Describe the Central Limit Theorem and its importance
 Determine the mean and standard deviation for the
sampling distribution of the sample proportion, p̂

 Describe sampling distributions of sample variances

A simple random sample is chosen by a process that selects a sample
of n objects from a population in such a way that each member of the
population has the same probability of being selected, the selection of
one member is independent of the selection of any other member, and
every possible sample of a given size, n, has the same probability of
selection.
This method is so common that the adjective simple is generally

dropped, and the resulting sample is called a random sample.

Random samples are the ideal. It is important that a sample represent the
population as a whole. Random sampling is our insurance policy against
allowing personal biases to influence the selection.
In a number of real-World sampling studies, analysts develop alternative

sampling procedures to lower the costs of sampling. But the basis for
determining if these alternative sampling strategies are acceptable is how
closely the results approximate those of a simple random sample.

The population mean μ, is a fixed (but unknown) number. We make
inferences about this attribute by drawing a random sample from the
population and computing the sample mean.
For each sample we draw, there will be a different sample mean, and the
sample mean can be regarded as a random variable with a probability
distribution.
The distribution of possible sample means provides a basis for inferential

statements about the sample.

 Descriptive statistics
 Collecting, presenting, and describing data
 Inferential statistics
 Drawing conclusions and/or making decisions
concerning a population based only on
sample data

Inferential Statistics
 Making statements about a population by

examining sample results
Sample statistics Population parameters
(known) Inference (unknown, but can
be estimated from
sample evidence)
Sample
Population

Inferential Statistics
Drawing conclusions and/or making decisions
concerning a population based on sample results.
 Estimation
 e.g., Estimate the population mean
weight using the sample mean
weight
 Hypothesis Testing
 e.g., Use sample evidence to test
the claim that the population mean
weight is 120 pounds

6.1
Sampling from a Population
 A Population is the set of all items or individuals

of interest
 Examples: All likely voters in the next election
All parts produced today
All sales receipts for November
 A Sample is a subset of the population

 Examples: 1000 voters selected at random for interview
A few parts selected for destructive testing
Random receipts selected for audit

Population vs. Sample
Population Sample

Why Sample?
 Less time consuming than a census

 Less costly to administer than a census
 It is possible to obtain statistical results of a
sufficiently high precision based on samples.

Simple Random Sample
 Every object in the population has the same probability

of being selected
 Objects are selected independently
 Samples can be obtained from a table of random
numbers or computer random number generators
 A simple random sample is the ideal against which

other sampling methods are compared

Sampling Distributions
 A sampling distribution is a probability

distribution of all of the possible values
of a statistic for a given size sample
selected from a population

Developing a
Sampling Distribution
 Assume there is a population …

A C D
 Population size N=4 B
 Random variable, X,
is age of individuals
 Values of X:
18, 20, 22, 24 (years)

Developing a
(continued)
In this example the Population Distribution is uniform:
P(x)
.25
0
18 20 22 24 x
A B C D
Uniform Distribution

Developing a
(continued)
Now consider all possible samples of size n = 2
1st 2nd Observation
Obs 18 20 22 24 16 Sample
Means
18 18,18 18,20 18,22 18,24
1st 2nd Observation
20 20,18 20,20 20,22 20,24 Obs 18 20 22 24
22 22,18 22,20 22,22 22,24 18 18 19 20 21
24 24,18 24,20 24,22 24,24 20 19 20 21 22
16 possible samples 22 20 21 22 23
(sampling with
replacement)
24 21 22 23 24

Developing a
(continued)
Sampling Distribution of All Sample Means
16 Sample Means Distribution of

Sample Means
1st 2nd Observation _
Obs 18 20 22 24 P(X)
.3
18 18 19 20 21
.2
20 19 20 21 22
.1
22 20 21 22 23
0 _
24 21 22 23 24 18 19 20 21 22 23 24 X
(no longer uniform)
Chapter Outline
Sampling
Distributions
Sampling Sampling Sampling

Distributions Distributions Distributions
of Sample of Sample of Sample
Means Proportions Variances

6.2
Sampling Distributions of
Sample Means
Sampling
Distributions


Sample Mean
 Let X1, X2, . . ., Xn represent a random sample from a

population
 The sample mean value of these observations is

defined as
1 n
X   Xi
n i1

If samples of n random and independent observations are repeatedly
and independently drawn from a population, then as the number of
samples becomes very large, the mean of the sample means
approaches the true population mean.
Suppose that a random sample of 25 cars yields a mean fuel

consumption of x = 31 miles per gallon. But we also wish to know how
good an approximation x = 31 is of the population mean. We use the
variance of the sampling distribution of the sample means to provide
the answer.
The variance of the sampling distribution of X decreases as the

sample size n increases.

Thus, larger samples result in greater certainty about our
inference of the population mean.

Standard Error of the Mean
 Different samples of the same size from the same

population will yield different sample means
 A measure of the variability in the mean from sample to
sample is given by the Standard Error of the Mean:
σ
σX 
n
 Note that the standard error of the mean decreases as
the sample size increases

Comparing the Population with its
Population Sample Means Distribution
N=4 n=2
μ  21 σ  2.236 μX  21 σ X  1.58
_
P(X) P(X)
.3 .3
.2 .2
.1 .1
0 0
18 19 20 21 22 23 24
_
18 20 22 24 X X
A B C D
Developing a
(continued)
Summary Measures for the Population Distribution:
P(x)
μ
 X i
N
.25
18  20  22  24
  21
4
0
18
A
20
B
22
C
24
D
x
σ
 i
(X  μ) 2
 2.236
N
Uniform Distribution

Developing a
(continued)
Summary Measures of the Sampling Distribution:
E(X) 
 X i

18  19  21   24
 21  μ
N 16
σX 
 ( X i  μ) 2
N
(18 - 21)2  (19 - 21)2    (24 - 21)2
  1.58
16
If sample values are
not independent
 If the sample size n is not a small fraction of the
population size N, then individual sample members are
not distributed independently of one another
 Thus, observations are not selected independently
 A finite population correction is made to account for
this:
σ2 N  n σ Nn
Var( X)  or σX 
n N 1 n N 1
The term (N – n)/(N – 1) is often called a finite population

correction factor

If the Population is Normal
 If a population is normal with mean μ and

standard deviation σ, the sampling distribution
of X is also normally distributed with
σ
μ X andμ σX 
n
 If the sample size n is not small relative to the population size N, then
σ Nn
μ X andμ σX 
n N 1
Standard Normal Distribution for
the Sample Means
Whenever the sampling distribution of the sample means is

a normal distribution, we can compute a standardized
normal random variable, Z, that has a mean of 0 and a
variance of 1:

Standard Normal Distribution for
the Sample Means
 Z-value for the sampling distribution of X :
X μ X μ
Z 
σX σ
n
where: =Xsample mean
μ
= population mean
σ
= standard error of the mean
x
Z is a standardized normal random variable with mean of 0

and a variance of 1
Results for the Sampling Distribution of the Sample
Means
Let X denote the sample mean of a random sample of n

observations from a population with mean  X and
2
variance  .
1. The sampling distribution of X has mean
E[X]  μ

2. The sampling distribution of X has standard deviation
σ
σx 
n
This is called the standard error of X .

3. If the parent population distribution is normal and, thus, the
sampling distribution of the sample means is normal, then
the random variable
X  μx
Z
σX
has a standard normal distribution with a mean of 0 and a

variance of 1.

Sampling Distribution Properties
Normal Population
E[X]  μ Distribution
μ x
(i.e. x is unbiased ) Normal Sampling
Distribution
(both distributions have the same mean)

μx
x
(continued)
σ Normal Population
σx  Distribution
n
μ x
(i.e. x is unbiased ) Normal Sampling
Distribution
(the distribution of x has a reduced

standard deviation μx
x
(continued)
As n increases, Larger
σ decreases
x
sample size
Smaller
sample size
μ x
Example 6.2 Executive Salary Distributions
(Normal Probability)
Suppose that, based on historical data, we believe that the annual

percentage salary increases for the chief executive officers of all midsize
corporations are normally distributed with a mean of 12.2% and a standard
deviation of 3.6%.
A random sample of nine observations is obtained from this population,

and the sample mean is computed.
What is the probability that the sample mean will be greater than 14.4%?

From this analysis we conclude that the probability that the sample mean
will be greater than 14.4% is only 0.0336. If a sample mean greater than
14.4% actually occurred, we might begin to suspect that the population
mean is greater than 12.2% or that we do not have a random sample that
properly represents the population probability distribution.

Example 6.3 Spark Plug Life (Normal Probability)
A spark plug manufacturer claims that the lives of its plugs are
normally distributed with a mean of 60,000 miles and a
standard deviation of 4,000 miles. A random sample of 16
plugs had an average life of 58,500 miles. If the manufacturer’s
claim is correct, what is the probability of finding a sample
mean of 58,500 or less?

This probability suggests that if the manufacturer’s claims —  = 60,000
2
and  = 4,000—are true, then a sample mean of 58,500 or less has a small
probability.
As a result, if we obtained a sample mean less than 58,500 we would be

skeptical about the manufacturer’s claims. This important concept—using
the probability of sample statistics to question the original assumption—is
developed more fully in Chapter 9.

Central Limit Theorem
 Even if the population is not normal,
 …sample means from the population will be

approximately normal as long as the sample
size is large enough.
 This important result enables us to use the

normal distribution to compute probabilities for
sample means obtained from many different
populations

(continued)
 Let X1, X2, . . . , Xn be a set of n independent random
variables having identical distributions with mean µ,
variance σ2, and X as the mean of these random
variables.
 As n becomes large, the central limit theorem states
that the distribution of
X  μx
Z
σX
approaches the standard normal distribution

the sampling
As the n↑
distribution
sample
becomes
size gets
almost normal
large
regardless of
enough…
shape of
population
x
If the Population is not Normal
(continued)
Population Distribution
Sampling distribution
properties:
Central Tendency
μx  μ
μ x
Variation Sampling Distribution
σ (becomes normal as n increases)
σx  Larger
n Smaller
sample size
sample
size
μx x
How Large is Large Enough?
 For most distributions, n > 25 will give a

sampling distribution that is nearly normal
 For normal population distributions, the
sampling distribution of the mean is always
normally distributed

Example
 Suppose a large population has mean μ = 8

and standard deviation σ = 3. Suppose a
random sample of size n = 36 is selected.
 What is the probability that the sample mean is

between 7.8 and 8.2?

Example
(continued)
Solution:
 Even if the population is not normally
distributed, the central limit theorem can be
used (n > 25)
 … so the sampling distribution of x is
approximately normal
 … with mean μx = 8
 …and standard deviation σ x  σ  3  0.5
n 36
Example
(continued)
Solution (continued):
 
 7.8 - 8 μ X -μ 8.2 - 8 
P(7.8  μ X  8.2)  P   
 3 σ 3 
 36 n 36 
 P(-0.4  Z  0.4)  0.3108
Population Sampling Standard Normal
Distribution Distribution Distribution .1554
??? +.1554
? ??
? ? Sample Standardize
? ? ?
?
7.8 8.2 -0.4 0.4
μ8 X μX  8 x μz  0 Z

Example 6.4 Marketing Study for Antelope Coffee
(Normal Probability)
Antelope Coffee, Inc., is considering the possibility of opening a gourmet

coffee shop in Big Rock, Montana. Previous research has indicated that
its shops will be successful in cities of this size if the mean annual family
income is above $70,000. It is also assumed that the standard deviation
of income is $5,000 in Big Rock, Montana.
A random sample of 36 people was obtained, and the mean income was
$72,300.
Does this sample provide evidence to conclude that a shop should be

opened?

From the standard normal table we find that the probability of obtaining a Z value of
2.76 or larger is 0.0029. Because this probability is very small, we can conclude that it
is likely that the population mean income is not $70,000 but is a larger value.
This result provides strong evidence that the population mean income is higher than
$70,000 and that the coffee shop is likely to be a success. In this example we can see
the importance of sampling distributions and the central limit theorem for problem
solving.

2
Given a population with a mean of μ = 100 and a variance of = 81, the
central limit theorem applies when the sample size is n ≥ 25. A random
sample of size n = 25 is obtained.
a. What are the mean and variance of the sampling distribution for the
sample means?
b. What is the probability that x ≥ 102 ?
c. What is the probability that 98 ≤ x ≤ 101 ?
d. What is the probability that x ≤ 101.5 ?

The lifetimes of lightbulbs produced by a particular manufacturer have a
mean of 1,200 hours and a standard deviation of 400 hours. The population
distribution is normal. Suppose that you purchase nine bulbs, which can be
regarded as a random sample from the manufacturer’s output.
a. What is the mean of the sample mean lifetime?
b. What is the variance of the sample mean?
c. What is the standard error of the sample mean?
d. What is the probability that, on average, those nine lightbulbs have lives of
fewer than 1,050 hours?

Assume that the standard deviation of monthly rents paid by students
in a particular town is $40. A random sample of 100 students was
taken to estimate the mean monthly rent paid by the whole student
population.
a. What is the standard error of the sample mean monthly rent?
b. What is the probability that the sample mean exceeds the

population mean by more than $5?
c. What is the probability that the sample mean is more than $4 below
the population mean?
d. What is the probability that the sample mean differs from the
population mean by more than $3?
Ch. 6-53
A random sample of 16 junior managers in the offices of
corporations in a large city center was taken to estimate average
daily commuting time for all such managers. Suppose that the
population times have a normal distribution with a mean of 87
minutes and a standard deviation of 22 minutes.
a) What is the probability that the sample mean is outside the range
85 to 95 minutes?
b) Suppose that a second (independent) random sample of 50

junior managers is taken. Without doing the calculations, state
whether the probabilities in part (a) would be higher, lower, or the
same for the second sample.
Ch. 6-54
Acceptance Intervals
 Goal: determine a range within which sample means are
likely to occur, given a population mean and variance
 By the Central Limit Theorem, we know that the distribution of X
is approximately normal if n is large enough, with mean μ and
standard deviation σ X
 Let zα/2 be the z-value that leaves area α/2 in the upper tail of the
normal distribution (i.e., the interval - zα/2 to zα/2 encloses
probability 1 – α)
 Then
μ  z/2σ X
is the interval that includes X with probability 1 – α

Acceptance intervals based on the normal distribution have wide applications.
They are widely used for quality-control monitoring of various production and
service processes. The interval
μ  z/2σ X
provides limits for the sample mean x , given that the population mean is μ .
Typically, α is very small (α < .01), and standard practice in U.S. industries is
to use z = 3.
This is the source for the term Six Sigma used for various quality-assurance
programs (Hiam, 1992). If the sample mean is outside the acceptance
interval, then we suspect that the population mean is not μ.
In other words, the process is not operating properly and steps are taken to
correct the process.
Ch. 6-56
6.3
Sample Proportions
Sampling
Distributions


Sample Proportions
Here, we indicate how we can use the sample proportion

to obtain inferences about the population proportion. The
proportion random variable has many applications,
including percent market share, percent successful
business investments, and outcomes of elections.

Sample Proportions
P = the proportion of the population having
some characteristic
 Sample proportion (p̂ ) provides an estimate
of P:
X number of items in the sample having the characteri stic of interest
pˆ  
n sample size
 0 ≤ p̂ ≤ 1
 has a binomial distribution, but can be approximated
p̂
by a normal distribution when nP(1 – P) > 5

^
Sampling Distribution of p
 Normal approximation:
P(Pˆ )
.3
.2
.1
0
0 .2 .4 .6 8 1 P̂
Properties:
P(1 P)
E(pˆ )  P and σ pˆ 
n
(where P = population proportion)

Z-Value for Proportions
Standardize p̂ to a Z value with the formula:
pˆ  P pˆ  P
Z 
σ pˆ P(1 P)
n
Where the distribution of Z is a good

approximation to the standard normal
distribution if nP(1−P) > 5

Example
 If the true proportion of voters who support

Proposition A is P = 0.4, what is the
probability that a sample of size 200 yields a
sample proportion between 0.40 and 0.45?
 i.e.: if P = 0.4 and n = 200, what is

P(0.40 ≤ ≤p̂0.45) ?

Example
(continued)
 if P = 0.4 and n = 200, what is
P(0.40 ≤ ≤p̂0.45) ?
P(1 P) .4(1  .4)

Find σ pˆ : σ pˆ    .03464
n 200
Convert to  .40  .40 .45  .40 

standard ˆ
P(.40  p  .45)  P Z 
normal:  .03464 .03464 
 P(0  Z  1.44)

Example
(continued)
 if P = 0.4 and n = 200, what is
P(0.40 ≤ ≤p̂0.45) ?
Use standard normal table: P(0 ≤ Z ≤ 1.44) = .4251
Standardized
Sampling Distribution Normal Distribution
.4251
Standardize
.40 .45 p̂ 0 1.44

Z

Example
A random sample of 270 homes was taken from a large

population of older homes to estimate the proportion of homes
with unsafe wiring. If, in fact, 20% of the homes have
unsafe wiring, what is the probability that the sample
proportion will be between 16% and 24%?

Example 6.8 Business Course Selection (Probability of
Sample Proportion)
It has been estimated that 43% of business graduates believe

that a course in business ethics is very important for imparting
ethical values to students (David, Anderson, and Lawrimore
1990).
Find the probability that more than one-half of a random

sample of 80 business graduates have this belief.

Suppose that we have a population with proportion P = 0.60 and
a random sample of size n = 100 drawn from the population.
a. What is the probability that the sample proportion

is more than 0.66?
b. What is the probability that the sample proportion

is less than 0.48?
c. What is the probability that the sample proportion is


Suppose that 44% of adult Australians believe that
Australia should become a republic. Calculate the
probability that more than 50% of a random sample of
100 adult Australians would believe this.

Forty percent of students at small colleges have brought
their own personal computers to campus. A random sample
of 120 entering freshmen was taken.
a. What is the standard error of the sample proportion

bringing their own personal computers to campus?
b. What is the probability that the sample proportion

is less than 0.33?
c. What is the probability that the sample proportion is

6.4
Sample Variances
Sampling
Distributions


By understanding the sampling distribution of sample
variances, we can make inferences about the population
variance. Thus, processes that have high variance can be
identified and improved.
In addition, a smaller population variance improves our ability

to make inferences about population means using sample
means.

Sample Variance
 Let x1, x2, . . . , xn be a random sample from a
population. The sample variance is
1 n
s2  
n  1 i1
(x i  x) 2
 the square root of the sample variance is called

the sample standard deviation
 the sample variance is different for different

random samples from the same population
Why divide by (n-1) for sample standard deviation?
Short answer:
Most of the time we do not know µ (the population average)
and we estimate it with x (the sample average).
The formula for s² measures the squared deviations from x

rather than µ .
The xi’s tend to be closer to their average x rather than µ ,

so we compensate for this by using the divisor (n-1) rather
than n.
Ch. 6-78
Sampling Distribution of
Sample Variances
 The sampling distribution of s2 has mean σ2
E[s 2 ]  σ 2
The conclusion that the expected value of the sample variance is the
population variance is quite general. But for statistical inference we
would like to know more about the sampling distribution.
If we can assume that the underlying population distribution is

normal, then it can be shown that the sample variance and the
population variance are related through a probability distribution
known as the chi-square distribution.

Chi-Square Distribution of
Sample and Population Variances
 If the population distribution is normal then
2
2 (n - 1)s
χ n 1  2
σ
has a chi-square (2 ) distribution with n – 1 degrees of
freedom
The chi-square family of distributions is used in applied statistical

analysis because it provides a link between the sample and the
population variances.
Ch. 6-80
Sampling Distribution of
Sample Variances
 the assumption of an underlying normal distribution is
more important for determining probabilities of sample
variances than it is for determining probabilities of
sample means.
 The distribution is defined for only positive values,

since variances are all positive values.

An example of the probability density function is shown in Figure 6.12.
The density function is asymmetric with a long positive tail. We can
characterize a particular member of the family of chi-square distributions
by a single parameter referred to as the degrees of freedom,
denoted as ʋ.
2
A chi-square distribution with ʋ degrees of freedom is denoted as X .
The mean and variance of this distribution are equal to the number of
degrees of freedom and twice the number of degrees of freedom:

If the population distribution is normal, then using these
results for the mean and variance of the chi-square
distribution, we find that
4
2σ
Var(s 2 ) 
n 1

The Chi-square Distribution
 The chi-square distribution is a family of distributions,
depending on degrees of freedom:
 d.f. = n – 1
0 4 8 12 16 20 24 28 2 0 4 8 12 16 20 24 28 2 0 4 8 12 16 20 24 28 2
d.f. = 1 d.f. = 5 d.f. = 15

 Text Appendix Table 7 contains chi-square probabilities
Degrees of Freedom (df)
Idea: Number of observations that are free to vary
after sample mean has been calculated
Example: Suppose the mean of 3 numbers is 8.0
Let X1 = 7 If the mean of these three

Let X2 = 8 values is 8.0,
What is X3? then X3 must be 9
(i.e., X3 is not free to vary)
Here, n = 3, so degrees of freedom = n – 1 = 3 – 1 = 2
(2 values can be any numbers, but the third is not free to vary
for a given mean)
For many applications involving the population variance, we
2
need to find values for the cumulative distribution of  ,
especially the upper and lower tails of the distribution—
for example,
P( 102  K )  0, 05
P( 102  K )  0, 05
the probability is 0,05 that a chi-square random variable with

10 degrees of freedom is greater / lower than K.

P ( 102  3,940)  0, 05 the probability is .05 that a chi-square
random variable with 10 degrees of
freedom is lower than 3,940.
the probability is .05 that a chi-square

P ( 102  18,307)  0, 05
random variable with 10 degrees of
freedom is greater than 18,307.
Ch. 6-89
If we have a random sample from a population with a
normal distribution, we can make inferences about the
population variance σ² by using s² and the chi-square
distribution.
This process is illustrated in the following examples.

Chi-square Example
 A commercial freezer must hold a selected
temperature with little variation. Specifications call
for a standard deviation of no more than 4 degrees
(a variance of 16 degrees2).
 A sample of 14 freezers is to be
tested
 What is the upper limit (K) for the
sample variance such that the
probability of exceeding this limit,
given that the population standard
deviation is 4, is less than 0.05?

Finding the Chi-square Value
2
(n  1)s Is chi-square distributed with (n – 1) = 13
χ2 
σ2 degrees of freedom
 Use the the chi-square distribution with area 0.05

in the upper tail:
213 = 22.36 (α = .05 and 14 – 1 = 13 d.f.)
probability
α = .05
2
213 = 22.36
Chi-square Example
(continued)
213 = 22.36 (α = .05 and 14 – 1 = 13 d.f.)
 (n  1)s 2
2 
So: P(s 2  K)  P  χ13   0.05
 16 
(n  1)K
or  22.36 (where n = 14)
16
(22.36)(16 )
so K  27.52
(14  1)
If s2 from the sample of size n = 14 is greater than 27.52, there is

strong evidence to suggest the population variance exceeds 16.

Basic Questions
Q1) A random sample of size n = 16 is obtained from a normally

distributed population with a population mean of µ = 100 and a variance
of σ² = 25.
a. What is the probability that x >101?
b. What is the probability that the sample variance is greater than 45?
c. What is the probability that the sample variance is greater than 60?

a. Find the probability that the sample mean is > 101.
101  100
zx  = .80
5
16
Probability that x  101 = 1 – Fz(.80) = .2119
b. Find the probability that the sample variance is > 45

(n  1) s 2 15(45)
P( 2
 )  P (  2 (15)  27) = between .05 and .025
 25
c. Find the probability that the sample variance is > 60
(n  1) s 2 15(60) 2
P(  )  P (  (15)  36) = Less than .005
2 25

Q2) A random sample of size n = 18 is obtained from a normally
distributed population with a population mean of µ = 46 and a variance of
σ² = 50.
a. What is the probability that the sample mean is greater than 50?
b. What is the value of the sample variance such that 5% of the sample
variances would be less than this value?
c. What is the value of the sample variance such that 5% of the sample
variances would be greater than this value?

a. Probability that the sample mean is > 50
50  46
zx  = 2.40
7.07107
18
Probability that x  50 = 1 – Fz(2.40) = .0082
b. 5% of the sample variances would be less than this value of sample variance
2  ( n  1) s 2 
P( s  k )  P  2   0.95
  
2 17 s 2
 17,.95  8.67 ,  8.67 , s 2  25.50
50

c. 5% of the samples variances would be greater than this value of sample variance
2  (n  1) s 2 
P(s  k )  P  2   0.05
  
2 17 s 2
 17,.05  27.59 ,  27.59 , s 2  81.147
50

Q3) Monthly rates of return on the shares of a particular common stock
are independent of one another and normally distributed with a standard
deviation of 1.6. A sample of 12 months is taken.
a. Find the probability that the sample standard deviation is less than 2.5.
b. Find the probability that the sample standard deviation is more than 1.0.

(n  1) s 2 11(2.5) 2
P( 2
 2
)  P(  2 (11)  26.86) = greater than .995 (.9952 exactly)
 (1.6)
(n  1) s 2 11(1) 2
b. P( 2
 2
)  P(  2 (11)  4.3) = between .95 and .975 (.9603 exactly)
 (1.6)

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Statistics for

Business and Economics

 Determine the mean and standard deviation for the

sampling distribution of the sample mean, X

 Determine the mean and standard deviation for the

sampling distribution of the sample proportion, p̂

Copyright © 2013 Pearson Education Ch. 6-2

This method is so common that the adjective simple is generally

Copyright © 2013 Pearson Education Ch. 6-3

In a number of real-World sampling studies, analysts develop alternative

Copyright © 2013 Pearson Education Ch. 6-4

The distribution of possible sample means provides a basis for inferential

Copyright © 2013 Pearson Education Ch. 6-5

Copyright © 2013 Pearson Education Ch. 6-6

 Making statements about a population by

Copyright © 2013 Pearson Education Ch. 6-7

Copyright © 2013 Pearson Education Ch. 6-8

 A Population is the set of all items or individuals

 A Sample is a subset of the population

Copyright © 2013 Pearson Education Ch. 6-9

Copyright © 2013 Pearson Education Ch. 6-10

 Less time consuming than a census

Copyright © 2013 Pearson Education Ch. 6-11

 Every object in the population has the same probability

 A simple random sample is the ideal against which

Copyright © 2013 Pearson Education Ch. 6-12

 A sampling distribution is a probability

Copyright © 2013 Pearson Education Ch. 6-13

 Assume there is a population …

Copyright © 2013 Pearson Education Ch. 6-14

In this example the Population Distribution is uniform:

Copyright © 2013 Pearson Education Ch. 6-15

Copyright © 2013 Pearson Education Ch. 6-16

Sampling Distribution of All Sample Means

16 Sample Means Distribution of

Sampling Sampling Sampling

Copyright © 2013 Pearson Education Ch. 6-18

Sampling Sampling Sampling

Copyright © 2013 Pearson Education Ch. 6-19

 Let X1, X2, . . ., Xn represent a random sample from a

 The sample mean value of these observations is

Copyright © 2013 Pearson Education Ch. 6-20

Suppose that a random sample of 25 cars yields a mean fuel

The variance of the sampling distribution of X decreases as the

Copyright © 2013 Pearson Education Ch. 6-21

Copyright © 2013 Pearson Education Ch. 6-22

 Different samples of the same size from the same

Copyright © 2013 Pearson Education Ch. 6-23

Summary Measures for the Population Distribution:

Copyright © 2013 Pearson Education Ch. 6-25

The term (N – n)/(N – 1) is often called a finite population

Copyright © 2013 Pearson Education Ch. 6-27

 If a population is normal with mean μ and

Whenever the sampling distribution of the sample means is

Copyright © 2013 Pearson Education Ch. 6-29

Z is a standardized normal random variable with mean of 0

Let X denote the sample mean of a random sample of n

1. The sampling distribution of X has mean

Copyright © 2013 Pearson Education Ch. 6-31

Copyright © 2013 Pearson Education Ch. 6-32

has a standard normal distribution with a mean of 0 and a

Copyright © 2013 Pearson Education Ch. 6-33

(both distributions have the same mean)