Statistics

and
Probability

U N D E R S TA N D I N G T H E P O I N T
E S T I M A T E O F P O P U L AT I O N M E A N

C O M P U T I N G I N T E R VA L E S T I M A T E F O R
P O P U L AT I O N M E A N
Key Terms to remember:
Point Estimate - is a specific numerical value of a
population parameter
Interval Estimate- is a range of values that may contain
the parameter of a population
 Summary table of three commonly used confidence levels

Confidence Level of Critical Z

The three level significance value
commonly used 90% = 0.10 Z= ± 1.65
confidence levels 95% = 0.05 Z= ± 1.96
are 90%, 95%, 99% = 0.01 Z= ± 2.58
and 99%
90% → = 1-.90 = 0.10 → = 0.10→ level of significance
95% → = 1-.95 = 0.05 → = 0.05→ level of significance
99% → = 1-.99 = 0.01 → = 0.01→ level of significance

Note ( 1 is the total area of the normal curve .5000 + .5000=1)

90% → Z= ± 1.65 → Critical Z value
95% → Z= ± 1.96 → Critical Z value
99% → Z= ± 2.58 → Critical Z value
 The interval estimation procedure is summarized in the following six-step process.

Step 1: Describe the population parameter of interest.

Step 2: Specify the confidence criteria (assumption of normally and test statistics using )
Step 3: Select the level of confidence and the corresponding coefficients ( or critical z value )
Step 4: Collect sample data and find the point estimate.
Step 5: Find E (Margin of Error) and compute the interval estimate

Step 6: Describe the results

Example Problem:
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 Php5. Find the point estimate and the interval estimate of
the population mean , using the 95% confidence level.

Solution
The sample size of 100 is large enough for the Central Limit Theorem to apply. So,
the distribution is normally distributed.
Step 1: Describe the population parameter of interest.
Answer: The parameter of interest is the mean of the population where the
sample comes from.
Step 2: Specify the confidence criteria ( assumption of normally and test statistics
using )
Answer: The sample information consist of n= 100 and = 5
Step 3: Select the level of confidence and the corresponding coefficients ( or critical z
value )
Answer: 95% confidence, or = 0.05, critical z = ±1.96
 Example Problem:
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 Php5. Find the point estimate and the interval estimate of
the population mean , using the 95% confidence level.

Solution
Step 4: Collect sample data and find the point estimate.
Answer: The point estimate of the population mean is 75

Step 5: Find E and compute the interval estimate ( E is the margin of error)
Example Problem:
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 Php5. Find the point estimate and the interval estimate of
the population mean , using the 95% confidence level.

Solution

Step 6: Describe the results.

◦ We can say with 95% confidence level that the interval estimate between 74.02 and 75.98
contains the population mean based on a sample size of 100.

◦ Therefore the Expenses on meals range from approximately Php 74 to Php 76.
THANK YOU!