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Interval Estimation13oct - Slides

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16 views38 pages

Interval Estimation13oct - Slides

Uploaded by

Ankit Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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INTERVAL ESTIMATION

Prof. Tamalika Koley


Decision Sciences Area
TOPICS

Interval Estimation

David R. Anderson, Dennis J. Sweeney, Thomas


A. William, Statistics for Business & Economics,
Cengage Learning (Chapter 14).
Introduction
Objective: Gather information about some characteristics of the population.

Problem: Population is unknown.

Solution: Get access only to a part of the population called sample.

❑ Enquirer makes a guess about this unknown population characteristic based on this known
sample.
❑ The process of going from known sample to the unknown population is called statistical
inference.
INFERENCE
Estimator (Statistic) and Estimate
❑ A function of the data or sample that is used to infer the value of an unknown parameter in the
population.

❑ It is a random variable whose value is completely determined by the sample values.

❑ For a given sample, the value of the estimator is called an estimate.

❑ In point estimation, a single numerical value is computed from the sample as an estimate of the
unknown parameter.
Some Examples

PARAMETER ESTIMATOR ESTIMATE

22.45

234.5

P 0.432
POINT ESTIMATION
•
Desirable Property
•
EXERCISE
•
Solution
•
Continues…
•
Interval Estimation: Confidence Interval
•
EXAMPLE
•
Summary
❑ A point estimate is a single number.

❑ A confidence interval provides additional information about variability

Lower Upper
Confidence Point Estimate Confidence
Limit Limit
Width of
confidence interval
Confidence Intervals
❑ How much uncertainty is associated with a point estimate of a population parameter?

❑ An interval estimate takes into consideration variation in sample statistics from sample to sample
along with the point estimate.

❑ Such interval estimates are called confidence intervals

❑ Stated in terms of level of confidence. Can never be 100% confident.


Example

Sample
Construction
•

very small
Confidence Coefficient
•
Q. How do you find this interval??

A. Using the sampling distributions of the statistics!!


•
General Formula
•

Point Estimate ± (Critical Value)(Standard Error)


Critical value
•
Continues…
0.05 0.025 0.10 0.01 0.005
1.645 1.960 1.28 2.326 2.576
•
Example
•

No. 1 2 3 4 5 6 7 8 9 10
Rate 5 2 4 1 2 4 3 3 5 1
Solution
•
Exercise
A sample of 11 circuits from a large normal population has a mean resistance of 2.20 ohms. We
know from past testing that the population standard deviation is 0.35 ohms.

Determine a 95% confidence interval for the true mean resistance of the population.
•
Continues...
•
Confidence interval
•
Graphical Representation
Critical Values
Example
Suppose you do a study of acupuncture to determine how effective it is in relieving pain.
You measure sensory rates for 15 subjects with the results given.
Use the sample data to construct a 95% confidence interval for the mean sensory rate for the
population (assumed normal) from which you took the data.

8.6, 9.4, 7.9, 6.8, 8.3, 7.3, 9.2, 9.6, 8.7, 11.4, 10.3, 5.4, 8.1, 5.5, 6.9.
Solution
•
Remarks

❑ Theoretically, the t-distribution only becomes perfectly normal when the sample size reaches the
population size.
❑ Nonetheless, for practical purposes, the t-distribution is treated as equal to the normal
distribution when sample sizes are greater than 30.
Example

A realtor believes the mean home price in a certain town with 35,000 homes has risen from the
currently accepted value of $200,000.
The realtor takes a simple random sample of 100 homes from the town's 45,252 homes and finds
the sample mean to be $245,000 and sample standard deviation of $5,250.
What is the 95% confidence interval for the population mean?
Solution
•

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