Chapter 09 PowerPoint

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Chapter
Nine
McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

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Chapter Nine
Estimation and Confidence Intervals
GOALS
When you have completed this chapter, you will be able to:
ONE
Define a what is meant by a point estimate.
TWO
Define the term level of level of confidence.
THREE
Construct a confidence interval for the population mean when
the population standard deviation is known.
FOUR
Construct a confidence interval for the population mean when
the population standard deviation is unknown. Goals
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Chapter Nine continued

Estimation and Confidence Intervals
GOALS
When you have completed this chapter, you will be able to:
FIVE
Construct a confidence interval for the population proportion.
SIX
Determine the sample size for attribute and variable sampling.
Goals
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A point estimate is
a single value A confidence interval
(statistic) used to is a range of values
estimate a within which the
population value population parameter is
(parameter). expected to occur.
The two confidence

An Interval Estimate intervals that are used
states the range within extensively are the
which a population 95% and the 99%.
parameter probably
lies.
Point and Interval Estimates
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Factors that
determine the
width of a
confidence The sample size, n
interval
The desired level of confidence
The variability in the population,

usually estimated by s
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For a 95% confidence 95% of the sample means

interval about 95% of for a specified sample
the similarly constructed size will lie within 1.96
intervals will contain the standard deviations of
parameter being the hypothesized
estimated. population mean.
For the 99% confidence

interval, 99% of the sample
means for a specified sample
size will lie within 2.58 standard
deviations of the hypothesized
population mean.
Interval Estimates
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Standard Error of the Sample Mean
Standard 
deviation of x 
n
the sampling
distribution of
the sample  x symbol for the standard error
means of the sample mean
 the standard deviation of the population
n is the size of the sample

Standard Error of the Sample
Means
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If s is not known and n

>30, the standard The standard error
deviation of the sample,
designated s, is used to s
approximate the sx 
population standard n
deviation.
If the population standard

s deviation is known or the
X z
sample is greater than 30
n we use the z distribution.
Standard Error of the Sample
Means
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If the population
standard deviation
is unknown, the
underlying
population is s
approximately X t
normal, and the n
sample size is less
than 30 we use the
t distribution.
The value of t for a given confidence level depends
upon its degrees of freedom.
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Characteristics of the t
distribution
It is a continuous It is bell-shaped and

distribution. symmetrical.
The t distribution is more
There is a family of t spread out and flatter at the
distributions. center than is the standard
normal distribution,
Assumption: the differences that diminish as n
population is normal increases.
or nearly normal
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Confidence interval for the mean
s
X  z
n
95% CI for the population mean

s
X  1.96
n
99% CI for the population mean

s
X  2.58
n Constructing General Confidence
Intervals for µ
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The Dean of the Business

School wants to estimate the
mean number of hours worked
per week by students. A sample
of 49 students showed a mean
of 24 hours with a standard
deviation of 4 hours. What is
the population mean?
The value of the population mean is not known. Our

best estimate of this value is the sample mean of 24.0
hours. This value is called a point estimate.
Example 3
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95 percent confidence interval
for the population mean
s 4
X  1.96  24.00  1.96
n 49
 24.00  1.12
The confidence
limits range from About 95 percent of the similarly
22.88 to 25.12. constructed intervals include the
population parameter.
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The confidence interval for a

population proportion
p (1  p)
pz
n
Confidence Interval for a

Population Proportion
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A sample of 500
executives who own
their own home
revealed 175 planned to
sell their homes and
retire to Arizona.
Develop a 98%
confidence interval for
the proportion of
executives that plan to
sell and move to
Arizona.
(.35)(.65)
.35  2.33  .35  .0497
500
Example 4
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Finite population
Adjust the standard

errors of the sample fixed upper bound
means and the proportion
 N n Finite-Population
x 
n N 1 Correction Factor
N, total number of objects

n, sample size Finite-Population
Correction Factor
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Standard error of the sample proportions
p (1  p ) N n
p 
n N 1
Ignore finite-population
correction factor if n/N < .05.
Finite-Population Correction
Factor
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95% confidence interval for the mean number of

hours worked per week by the students if there
are only 500 students on campus
n/N = 49/500 = .098 > .05

Use finite population correction factor
4 500  49
24  1.96( )( )  24.00  1.0648
49 500  1
EXAMPLE 4 revisited
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3 factors that determine the size of a sample
The degree of confidence selected
The maximum allowable error
The variation in the

population
Selecting a Sample Size
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Calculating the sample size
2
 zs
n 
 E 
where
E is the allowable error
z the z- value corresponding to the selected
level of confidence
s the sample deviation of the pilot survey
Selecting a Sample Size
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A consumer group
would like to estimate
the mean monthly
electricity charge for a
single family house in
July within $5 using a
99 percent level of
confidence. Based on
similar studies the
standard deviation is 2
 (2.58)(20) 
estimated to be $20.00. n   107
How large a sample is  5 
required?
Example 6
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The formula for 2

determining the  Z
n  p(1  p) 
sample size in the case  E
of a proportion is
where
p is the estimated proportion, based on past
experience or a pilot survey
z is the z value associated with the degree of
confidence selected
E is the maximum allowable error the
researcher will tolerate
Sample Size for Proportions
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The American Kennel Club

wanted to estimate the
proportion of children that
have a dog as a pet. If the
club wanted the estimate to
be within 3% of the
population proportion, how many children would they
need to contact? Assume a 95% level of confidence and
that the club estimated that 30% of the children have a dog
as a pet.
2
 1.96 
n  (.30)(.70)   897
 .03 
Example 7
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What happens when
the population has less
members than the
sample size
calculated requires?
Step One: Calculate the sample

size as before.
Step Two: Calculate no
the new sample size. n= no
1+
N
where no is the sample size
calculated in step one. Optional method, not covered in text:
Sample Size for Small Populations
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An auditor wishes to survey
employees in an organization to
determine compliance with
federal regulations. The auditor
estimates that 80% of the
employees would say that the
organization is in compliance.
The organization has 200
employees. The auditor wishes
to be 95% confident in the
results, with a margin of error no
greater than 3%. How many
employees should the auditor
survey? Example 8 Optional
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Step One
Calculate the sample size as before.
2
 Z 2
n  p(1  p)  = (.80)(.20) 1.96 = 683
 E
.03
Step Two
Calculate the new sample size.
no 683
n= = = 155
1 + no 1 + 683
N 200
Example 8 continued

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McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

Chapter Nine continued

The two confidence

The desired level of confidence

The variability in the population,

For a 95% confidence 95% of the sample means

For the 99% confidence

Standard Error of the Sample Mean

 the standard deviation of the population

n is the size of the sample

If s is not known and n

If the population standard

It is a continuous It is bell-shaped and

95% CI for the population mean

99% CI for the population mean

The Dean of the Business

The value of the population mean is not known. Our

The confidence interval for a

Confidence Interval for a

Adjust the standard

N, total number of objects

Standard error of the sample proportions

95% confidence interval for the mean number of

n/N = 49/500 = .098 > .05

3 factors that determine the size of a sample

The degree of confidence selected

The maximum allowable error

The variation in the

Calculating the sample size

The formula for 2

The American Kennel Club

Step One: Calculate the sample

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