Chapter (8)

Estimation and Confedence Intervals Examples

Types of estimation:
i. Point estimation:
Example (1)
Consider the sample observations
17,3,25,1,18,26,16,10
8

  X 17  3  25  1  18  26  16  10 116
i
X i 1
   14.5
8 8 8
14.5 is a point estimate for  using the estimator X and the given sample
observations.
ii. Interval estimation:
Constructing confidence interval : The general form of an interval estimate of a
population parameter:

Point Estimate ± Criticalvalue *Standard error

This formula generates two values called the confidence limits;
- Lower confidence limit (LCL).
- Upper confidence limit (UCL).
Another way to find the confidence interval we used the confidence

Confidence Interval for a Population Mean

Case1: Confidence Interval for Population Mean with known Standard
Deviation (normal case):
The confidence limits are:

Steps for calculating:

1. Obtain Z  2 ,from the table of the area under the normal curve.

2. Calculate Z  2 .
n
 
3. L= X  Z 2 U= X  Z 2
n n
X :The mean estimator σ : The standard deviation of the population .

n : The standard error of the mean  x  .
 Z : Critical value.
2

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 Example (2)
A sample of 49 observations is taken from a normal population with a standard
deviation of 10.the sample mean is 55,determine the 99 percent confidence interval
for the population mean.
Solution:
 2 

X ~ N ,  2
 X ~ N   ,  σ = 10 , n = 49, 𝑋̅ = 55 ,Confidence level = 0.99,
 n 
∴ 𝛼 = 1 − 0.99 = 0.01
∴ 𝑍0.01 = 𝑍0.005 = −2.58
2
The confidence limits are:
  10 
X  Z  55  2.58   55  3.6857
2 n  49 

51.3143    58.6857
51.3143 , 58.6857 

Example (3)
- IF you have (51.3143, 58.6857). Based on this information, you know that the best point estimate
of the population mean ̂  is:
upper  lower 58.6857  51.3143 110
ˆ     55
2 2 2

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 Case2: Confidence Interval for a Population Mean with unknown Standard
Deviation
S
ˆ  X  t 
n 1; n
2

Example (4)
The owner of Britten's Egg Farm wants to estimate the mean number of eggs laid
per chicken. A sample of 20 chickens shows they laid an average of 20 eggs per
month with a standard deviation of 8 eggs per month (a sample is taken from a
normal population).
i. What is the value of the population mean? What is the best estimate of this
value?
ii. Explain why we need to use the t distribution. What assumption do you
need to make?
iii. For a 95 percent confidence interval, what is the value of t?
iv. Develop the 95 percent confidence interval for the populationmean.
v. Would it be reasonable to conclude that the population mean is 21 eggs?
What about 5 eggs?
Solution:
i. the population mean is unknown, but the best estimate is 20,the sample mean
ii. Use the t distribution as the standard deviation is unknown.However, assume the
population is normally distributed.
iii. t  t 0.05 t19,0.025 2.093
n 1; 201,
2 2

S  8 
iv. X t   20  2.093   20  3.74
n 1;
2 n  20 

16.26    23.74
16.26 , 23.74
v. Yes, because the value of µ=21 is included within the confidence interval estimate.
No, because the value of µ=5 is not included within the confidence interval estimate.

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Example (5)
Find a 90% confidence interval for a population mean  for these values:
n  14 , x  1258 , s2  45796 , X ~ N , 2 
Solution:
  1  0.90  0.10
t   t 0.10 t13,0.05 1.771
n 1; 141,
2 2
S
ˆ  X  t 
n 1; n
2

 214 
 1258  1.771 
 14 
 1258  101.29

1156 .71    1359 .29
1156 .71, 1359.29

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 Confidence Interval for a Population Proportion
(Large Sample)
When the sample size is large , n  5, n1     5 , the sample proportion,
X 𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑠𝑢𝑐𝑐𝑒𝑠𝑠𝑒𝑠
P =
n 𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑡𝑟𝑖𝑎𝑙𝑠

  1    
P ~ N   , 
 n 
The confidence interval for a population proportion:
P1  P
  P  Z
2
n
P1  P 
n
The standard error of the proportion

Example (6)
The owner of the West End credit Kwick Fill Gas Station wishes to determine the
proportion of customers who use a credit card or debit card to pay at the pump. He
surveys 100 customers and finds that 80 paid at the pump.
a. Estimate the value of the population proportion.
b. Develop a 95 percent confidence interval for the population proportion.
c. Interpret your findings.
Solution:
a.
X 80
 P   0.8
n 100
b.
Z 0.05  Z0.025  Z0.9750  1.96 Z 0.05  Z0.9750  1.96
1
2 2

P1  P 0.80.2  0.8  1.96 0.0016  0.8  1.960.04  0.8  0.0784

P  Z  0.8  1.96
2
n 100

0.72    0.88
0.72 , 0.88
c .We are reasonably sure the population proportion is between 0.72 and o.88
percent .

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Example (7)
The Fox TV network is considering replacing one of its prime-time crime
investigation shows with a new family-oriented comedy show. Before a final decision
is made, network executives commission a sample of 400 viewers. After viewing the
comedy, 0.63 percent indicated they would watch the new show and suggested it
replace the crime investigation show.
a. Estimate the value of the population proportion.
b. Develop a 99 percent confidence interval for the population proportion.
c.Interpret your findings.
Solution:
a.
  P  0.63
b.
Z 0.01  Z0.005  2.58
2
Z 0.01  Z10.005  Z0.9950  2.58
1
2
P1  P  0.630.37   0.63  2.58
P  Z  0.63  2.58 0.00058275
2
n 400
 0.63  2.580.02414   0.63  0.0623

0.57    0.69
0.57 , 0.69
c .We are reasonably sure the population proportion is between 0.57 and
o.69 percent .

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Note:
If the value of estimated proportion(p) not mentioned we substitute it by o.5( as studies
and reachears recommended)

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Choosing an appropriate sample size for the population mean
𝜎 𝑼𝑪𝑳−𝑳𝑪𝑳
𝑒 = ±𝑍 Or 𝒆 =
√𝑛 𝟐
𝝈
𝒆 = 𝒁 𝜶 ⁄𝟐
√𝒏
The sample size for estimating the population mean:
𝒁 𝜶 ⁄𝟐 𝝈 𝟐
𝒏=( )
𝒆

Example (8)
A student in public administration wants to determine the mean amount members of
city councils in large cities earn per month as remuneration for being a council
member. The error in estimating the mean is to be less than $100 with a 95 percent
level of confidence. The student found a report by the Department of Labor that
estimated the standard deviation to be $1,000. What is the required sample size?
Solution:
Given in the problem:
 E, the maximum allowable error, is $100
 The value of z for a 95 percent level of confidence is 1.96,
 The estimate of the standard deviation is $1,000.

2
  
  Z   
     1.96 1000  2
n  2      384.16  385
 e   100 
 
 
Example (9)
A population is estimated to have a standard deviation of 10.if a 95 percent
confidence interval is used and an interval of  2 is desired .How large a sample is
required?
Solution:Given in the problem:
 E, the maximum allowable error, is 2The value of z for a 95 percent level of
confidence is 1.96,
 The estimate of the standard deviation is10.

2
  
  Z   
  2    1.96 10 2
n     96.04  97
 e   2 
 
 

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Example (10)
If a simple random sample of 326 people was used to make a 95% confidence interval of (0.57,0.67),
what is the margin of error e  ?
Solution:
upper  lower 0.67  0.57 0.1
e    0.05
2 2 2
Example (11)
If n=34, the standard deviation 4.2   , 1    95% .What is the maximum allowable error E  ?
Solution:
 
e  Z  
2 n 

 4.2 
e  1.96   1.960.7203   1.41
 n

The maximum allowable error (e) = 1.41

Choosing an appropriate sample size for the population proportion

The margin error for the confidence interval for a population proportion:

𝜋(1 − 𝜋)
𝑒 = 𝑍𝛼 √
2 𝑛
Solving "e" equation for "n" yields the following result:
2
𝑍𝛼 √𝜋(1 − 𝜋)
2
𝑛=( )
𝑒
Or

𝑍𝛼 2
𝑛 = 𝜋(1 − 𝜋) ( 2 )
𝑒

2
 
 Z    1   
 
n 2 2
e

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Example (12)
The estimate of the population proportion is to be within plus or minus o.o5, with a
95 percent level of confidence. The best estimation of the population proportion is
o.15.How large a sample is required?
Solution:
2
 
 Z    1   
  1.96  0.151  0.15 3.8416 0.15  0.85
2
n  2 
 
e2 0.052 0.0025
3.8416  0.1275 0.4898
   195.92  196
0.0025 0.0025

Example (13)
The estimate of the population proportion is to be within plus or minus o.10, with a
99 percent level of confidence. How large a sample is required?

Solution:
2
 
 Z    1   
  2.582 0.51  0.5  6.65640.5  0.5
n 2 2 
e 0.102 0.01
6.6564  0.25 1.6641
   166.41  167
0.01 0.01

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