1

Learning Objectives
 Recap •Sampling
••Types Distribution
Through Examples
• Quizof Estimation
•Sampling Errors
 Today’s Session •Estimator
Practice Exercises
••Sample from & Estimates
Normal population
 Concept Reinforcement ••Sampling
Confidence
from Interval
Non-normal
• Interval Estimates of Mean
population
 Quiz & Assignment • Central Limit Theorem
and Proportion from Large
Samples
 Situation - 1
2

Suppose you were trying to determine the mean rent of a two-bedroom apartment in
your town. You might look in the classified section of the newspaper, write down
several rents listed, and average them together.
Types of Estimators

Estimator

Point Interval
Estimator Estimator
 Confidence Level & Confidence Intervals
5
Confidence Level
If the confidence level (CL)
is 95%, then we say that,
"We estimate with 95%
confidence that the true
value of the population mean
is between say, 20 minutes to
40 minutes “
To get a 90% confidence interval, we must include the
central 90% of the probability of the normal distribution. If
we include the central 90%, we leave out a total of α = 10%
in both tails, or 5% in each tail, of the normal distribution.
To get a 95% confidence interval, we must include the
central 95% of the probability of the normal distribution. If
we include the central 95%, we leave out a total of α = 5% in
both tails, or 2.5% in each tail, of the normal distribution.
To get a 99% confidence interval, we must include the
central 99% of the probability of the normal distribution. If
we include the central 99%, we leave out a total of α = 1% in
both tails, or 0.5% in each tail, of the normal distribution.
 Confidence Level & Confidence Intervals
6
– Contd..

To get a 90% confidence interval, we must include the central 45% of

the probability of the normal distribution in ‘each tail’. If we include
45% from the mean, we leave out a total of α = 5% in each tail, of the
normal distribution. Probability = 0.4500 in a normal distribution table
is at z = ±1.65.

a) To get a 95% confidence interval, Find the z score.

b) To get a 99% confidence interval, find the z score

 Confidence Level & Confidence Intervals
8

To get a 90% confidence interval, we must include the central Probability = 0.9000 on both
45% of the probability of the normal distribution in ‘each tail’. If tails (0.4500 on each tail), in a
we include 45% from the mean, we leave out a total of α = 5% in normal distribution table is at z
each tail, of the normal distribution. = ±1.65.

To get a 95% confidence interval, we must include the central

47.5% of the probability of the normal distribution in ‘each tail’. Probability = 0.9500
If we include 47.5% from the mean, we leave out a total of α = (0.4750 on each tail) of a
2.5% in each tail, of the normal distribution. normal distribution table is
at z = ±1.96
To get a 99% confidence interval, we must include the central
49.5% of the probability of the normal distribution in ‘each tail’.
If we include 49.5% from the mean, we leave out a total of α = Probability = 0.9900
0.5% in each tail, of the normal distribution. (0.4950 on each tail) in a
normal distribution table is
at z = ±2.57
Value of Zα/2 for different values of alpha

Alpha (α ) Zα/2 Confidence interval for

population mean when
population standard
deviation is known
0.1 1.64 x̄ ± (1.64 * )
0.05 1.96 x̄ ± (1.96 * )
0.02 2.33 x̄ ± (2.33 * )
0.01 2.58 x̄ ± (2.58 * )
 Interval Estimates of Mean from Large
11
Samples (σ Known)

Interval Estimate = x̄ ± Margin of Error

Interval Estimate = x̄ ± (z * σ )

x̄ − (z * σ ) to x̄ + (z * σ )
Where,

x̄ = Sample Mean
Z = No. of Standard errors found from the
confidence Interval
σ = Standard Error =
 Lets try this:
12
Playbill mazagine reported that the mean annual household income
of its readers is $119,155. Assume this estimate of the mean annual
household income is based on a sample of 80 households, and based
on past studies, the population standard deviation is known to be
$30000.
a. Develop a 90% confidence interval estimate of the population
mean
 Lets try this:
15
Playbill mazagine reported that the mean annual household income
of its readers is $119,155. Assume this estimate of the mean annual
household income is based on a sample of 80 households, and based
on past studies, the population standard deviation is known to be
$30000.
a. Develop a 90% confidence interval estimate of the population
mean
b. Develop a 95% confidence interval estimate of the population
mean
 Lets try this:
18
Playbill mazagine reported that the mean annual household income
of its readers is $119,155. Assume this estimate of the mean annual
household income is based on a sample of 80 households, and based
on past studies, the population standard deviation is known to be
$30000.
a. Develop a 90% confidence interval estimate of the population
mean
b. Develop a 95% confidence interval estimate of the population
mean
c. Develop a 99% confidence interval estimate of the population
mean
 Interval Estimates of Proportion from
20
Large Samples

Interval Estimate = p′ ± (z * σ )

= p′ - (z * σ ) to p′ - (z * σ )
Where,

p′ = Sample proportion
Z = No. of Standard errors found from the
confidence Interval
σ = Standard Error =
p= Probability of favourable event
q = complimentary probability = 1-p
 Lets try this..
21
The consumer Reports National Research Center conducted a telephone survey
of 2000 adults to learn about the major economic concerns for the future. The
survey results showed that 1760 of the respondents think the future health of
Social Security is a major economic concern.

a) What is the point estimate of the population proportion of adults who think
the future health of the Social Security is a major economic concern?
b) At 90% confidence, what is margin of error?
c) Develop a 90% confidence interval for the population proportion of adults
who think the future health of Social Security is a major economic concern.
d) Develop a 95% confidence interval for this population proportion
 Lets try this..
22
The consumer Reports National Research Center conducted a telephone survey
of 2000 adults to learn about the major economic concerns for the future. The
survey results showed that 1760 of the respondents think the future health of
Social Security is a major economic concern.

a) What is the point estimate of the population proportion of adults who think
the future health of the Social Security is a major economic concern?
 Lets try this..
25
The consumer Reports National Research Center conducted a telephone survey
of 2000 adults to learn about the major economic concerns for the future. The
survey results showed that 1760 of the respondents think the future health of
Social Security is a major economic concern.

a) What is the point estimate of the population proportion of adults who think
the future health of the Social Security is a major economic concern?
b) At 90% confidence, what is margin of error?
 Lets try this..
27
The consumer Reports National Research Center conducted a telephone survey
of 2000 adults to learn about the major economic concerns for the future. The
survey results showed that 1760 of the respondents think the future health of
Social Security is a major economic concern.

a) What is the point estimate of the population proportion of adults who think
the future health of the Social Security is a major economic concern?
b) At 90% confidence, what is margin of error?
c) Develop a 90% confidence interval for the population proportion of adults
who think the future health of Social Security is a major economic concern.
 Lets try this..
30
The consumer Reports National Research Center conducted a telephone survey
of 2000 adults to learn about the major economic concerns for the future. The
survey results showed that 1760 of the respondents think the future health of
Social Security is a major economic concern.

a) What is the point estimate of the population proportion of adults who think
the future health of the Social Security is a major economic concern?
b) At 90% confidence, what is margin of error?
c) Develop a 90% confidence interval for the population proportion of adults
who think the future health of Social Security is a major economic concern.
d) Develop a 95% confidence interval for this population proportion
 Small sample
31

The population standard deviation for pizza delivery is six minutes and the
sample mean delivery time is 36 minutes. Use a sample size of 20. Find a 95%
confidence interval estimate for the true mean pizza delivery time.
Terminology
Estimate

Point Estimate

Interval Estimate

Confidence Level

Confidence Interval
 Two Tail Vs One Tail (95% confidence
35
Level)
 Two Tail Vs One Tail
Two Tail Test
 Both sides of the Distribution
curve are tested
 Confidence level of say, 90% is
equally distributed between the
tails. 45% on left side and 45% on
the right side.
 Significance level ‘α’ alpha, is
distributed equally on both the
sides. 5% on right side and 5% on
the left side.
One Tail Test
 Only one side of the Distribution
curve is tested. Either left side or
right side
 Confidence level of 90% is not
equally distributed. 50% on the
side not tested and 40% on the
side tested
 Significance level ‘α’ alpha, is
distributed unequally. The entire
10% is distributed to one side, to
the side that is being tested
 Large sample Vs Small Sample
Large Sample
 Sample size n > 30
 When the population standard deviation, σ
is known, and n > 30, Z –test is conducted
 Standard Normal Distribution table is
referred for z-score
 Does not contain degrees of freedom
 Confidence levels are taken to study the z-
distribution table
Small Sample
 Sample size < 30
 When Population standard deviation, σ is
unknown, and n < 30, t –test is conducted.
In this case, sample standard deviation ‘s’ is
known
 t- Distribution table is referred for t-score
 Degrees of Freedom should be known to
study the table
 Significance levels (1-confidence level) are
taken to study t-table
How to read a t – distribution table
 Interval Estimates using t-Distribution
40

σ not known, s known.

Sample size is small. n< 30.

William Goset, found ‘student t-distribution’

 Notation
41

T = random Variable like X

tdf Student's t-distribution
df = degrees of freedom; df = n – 1.

• Example: if sample of size

≥ n = 20 items, then the degrees

of freedom is
df = n - 1 = 20 – 1 = 19
 Interval Estimates of Mean from small
42
Samples

Interval Estimate = x̄ ± (tdf * σ )

x̄ − (tdf * σ ) to x̄ + (tdf * σ )

Where,

x̄ = Sample Mean
tdf = t-score
σ = Standard Error =
 Practice problems:
43

For a t distribution with 16 degrees of freedom, find the area, or probability, in

each region.

a. To the right of 2.120

 Practice problems:
44

For a t distribution with 16 degrees of freedom, find the area, or probability, in

each region.

a. To the right of 2.120

b. To the left of 1.337
 Practice problems:
45

For a t distribution with 16 degrees of freedom, find the area, or probability, in

each region.

a. To the right of 2.120

b. To the left of 1.337
c. To the left of -1.746
 Practice problems:
46

For a t distribution with 16 degrees of freedom, find the area, or probability, in

each region.

a. To the right of 2.120

b. To the left of 1.337
c. To the left of -1.746
d. To the right of 2.583
 Practice problems:
47

For a t distribution with 16 degrees of freedom, find the area, or probability, in

each region.

a. To the right of 2.120

b. To the left of 1.337
c. To the left of -1.746
d. To the right of 2.583
e. Between -2.120 and 2.12
f. Between -1.746 and 1.746
 Practice problems:
48

For a t distribution with 16 degrees of freedom, find the area, or probability, in

each region.

a. To the right of 2.120

b. To the left of 1.337
c. To the left of -1.746
d. To the right of 2.583
e. Between -2.120 and 2.120
 Practice problems:
49

Find the t values for each of the following cases:

a. Upper tail area of 0.025 with 12 degrees of freedom
 Practice problems:
50

Find the t values for each of the following cases:

a. Upper tail area of 0.025 with 12 degrees of freedom
b. Lower tail area of 0.05 with 50 degrees of freedom
 Practice problems:
51

Find the t values for each of the following cases:

a. Upper tail area of 0.025 with 12 degrees of freedom
b. Lower tail area of 0.05 with 50 degrees of freedom
c. Upper tail area of 0.01 with 30 degrees of freedom
 Practice problems:
52

Find the t values for each of the following cases:

a. Upper tail area of 0.025 with 12 degrees of freedom
b. Lower tail area of 0.05 with 50 degrees of freedom
c. Upper tail area of 0.01 with 30 degrees of freedom
d. Where 90% of the area falls between these two t values with 25 degrees of
freedom
 Practice problems:
53

Find the t values for each of the following cases:

a. Upper tail area of 0.025 with 12 degrees of freedom
b. Lower tail area of 0.05 with 50 degrees of freedom
c. Upper tail area of 0.01 with 30 degrees of freedom
d. Where 90% of the area falls between these two t values with 25 degrees of
freedom
e. where 95% of the area falls between these two t values with 45 degrees of
freedom
 Practice problems:
54

The average cost per unit of a hotel room in New York City is $273. Assume
this estimate is based on a sample of 45 hotels and that the sample standard
deviation is $65.
a. With 95% confidence, what is the margin of error?
 Practice problems:
57

The average cost per unit of a hotel room in New York City is $273. Assume
this estimate is based on a sample of 45 hotels and that the sample standard
deviation is $65.
a. With 95% confidence, what is the margin of error?
b. What is the 95% confidence interval estimate of the population mean?
 Practice problems:
58

The average cost per unit of a hotel room in New York City is $273. Assume
this estimate is based on a sample of 45 hotels and that the sample standard
deviation is $65.
a. With 95% confidence, what is the margin of error?
b. What is the 95% confidence interval estimate of the population mean?
c. Two years ago the average cost of a hotel room in New York City was $229.
Discuss the change in cost over the two-year period.
Terminology

Confidence Level

Significance Level

Two Tail Test

One Tail Test

t – distribution

Degrees of Freedom
69
Next Session

Testing of One tail & Two

Hypothesis tailed tests
 Terminology
71
 Estimator: A sample statistic used to estimate a population parameter
 Estimate: A specified observed value of an estimator
 Point Estimate: A single number used to estimate an unknown population
parameter
 Interval Estimate: A range of values to estimate an unknown population
parameter
 Confidence Limits: The upper and lower boundaries of a confidence interval
 Confidence Level: The probability that statisticians associate with an interval
estimate of population parameter, indicating how confident they are.
 Confidence Interval: A range of values that has some designated probability
of including the true population parameter value
 Degrees of Freedom: The number of values in a sample we can specify freely
once we know something about that sample
 Terminology
72
 Confidence Level: The probability that statisticians associate with an interval
estimate of population parameter, indicating how confident they are.
 Degrees of Freedom: the number of objects in a sample that are free to vary