Quantitative Methods assignment

Q1
Difference between Point Estimate and Interval Estimate
Point Estimate:
• A single value approximating a population parameter

• Computed from sample data.
• Amounts to a "best guess" for the population parameter.
Example: Sample mean (x̄) = 85
Interval Estimate:
• A range of values within which the population parameter may lie

• Provides a margin of error
• More informative than point estimates.
Concept of confidence interval for any estimate (Mean /

Proportion)
A confidence interval is a range of values that we believe contains a population parameter with a
specified level of confidence. It is derived from sample data and follows statistical principles.
Key components of a confidence interval include:
1. Point Estimate: This is the midpoint of the interval, usually represented by a sample statistic
such as the sample mean or sample proportion.
2. Margin of Error: This measures the distance from the point estimate to the edges of the interval,
reflecting the uncertainty in our estimate.
3. Confidence Level: This indicates the likelihood that the interval includes the true population
parameter. Common confidence levels are 90%, 95%, and 99%.
Interpreting a Confidence Interval:
When we create a 95% confidence interval, we are expressing that we are 95% confident the true
population parameter falls within that range. In practical terms, if we were to conduct the sampling
process repeatedly, 95% of the intervals we construct would encompass the true population parameter.
Example: For instance, if we have a 95% confidence interval for the average height of a population
that ranges from 165 cm to 175 cm, we can say with 95% confidence that the true average height of the
population is between 165 cm and 175 cm.
Factors Influencing the Width of a Confidence Interval:
Sample Size: Increasing the sample size results in narrower intervals.
Confidence Level: A higher confidence level results in wider intervals.
Population Variability: Greater variability within the population leads to wider intervals.
The formula for the confidence interval of the mean when the population standard deviation is unknown:
Confidence Interval = x ± z*(̄σ/√n)

Where:
• x ̄ is the sample mean (85)
• z is the z-score corresponding to the desired confidence level
• σ is the population standard deviation (6)
• n is the sample size (30)
99% Confidence Interval:
1. Find the z-score for 99% confidence:

For a 99% confidence level, the z-score is approximately 2.576.
2. Calculate the margin of error:

Margin of error = z*(σ/√n) = 2.576 * (6/√30) ≈ 2.82
3. Calculate the confidence interval:

Confidence Interval = 85 ± 2.82
= (82.18, 87.82)
95% Confidence Interval:
1. Find the z-score for 95% confidence:

For a 95% confidence level, the z-score is approximately 1.96.
2. Calculate the margin of error:

Margin of error = z*(σ/√n) = 1.96 * (6/√30) ≈ 2.15
3. Calculate the confidence interval:

Confidence Interval = 85 ± 2.15
= (82.85, 87.15)
Interpretation:
• 95% Confidence Interval: We are 95% confident that the true population mean falls between
82.85 and 87.15 points.
• 99% Confidence Interval: We are 99% confident that the true population mean falls between
82.18 and 87.82 points.
This calculation shows that as the confidence level increases, the interval becomes wider, reflecting
greater certainty but less precision.
Q2 (A)
Given: Mean μ =12,000 Standard deviation σ =1,500
We can use the z-score formula to standardize the rent values and then use the standard normal
distribution table or a calculator to find the probabilities.
a) Probability that a tenant pays more than 10,500 in rent:
z = (x - μ) / σ = (10500 - 12000) / 1500 = -1
Using the z-table or a calculator, the probability of a z-score being less than -1 is approximately 0.1587.
Therefore, the probability of a tenant paying more than 10,500 is:
P(x > 10500) = 1 - P(x < 10500) = 1 - 0.1587 = 0.8413
b) Probability that a tenant pays more than 14,700 in rent:
z = (x - μ) / σ = (14700 - 12000) / 1500 = 1.8
Using the z-table or a calculator, the probability of a z-score being less than 1.8 is approximately 0.9641.
Therefore, the probability of a tenant paying more than 14,700 is:
P(x > 14700) = 1 - P(x < 14700) = 1 - 0.9641 = 0.0359
So, the answers are:
a) The probability that a tenant selected at random pays more than 10,500 in rent is 0.8413 / 84.13%
b) The probability that a tenant selected at random pays more than 14,700 in rent is 0.0359 / 3.59%
Q2 (B)
Given Information
1. Null Hypothesis (H₀): The average recovery time with the drug is 7 days, i.e., μ = 7
2. Alternative Hypothesis (H₁): The average recovery time with the drug is less than 7 days, i.e.,
μ<7
3. Significance Level (α): 5% or 0.05
4. Sample Mean ( Xˉ): 6.5 days
5. Population Standard Deviation (σ): 2 days
6. Sample Size (n): 50
Step 1: Calculate the Z-Score
The formula for the z-score is: z = (x̄ - μ) / (σ / √n)
Where:
• x is the sample mean (6.5 days)̄
• μ is the population mean under the null hypothesis (7 days)
• σ is the population standard deviation (2 days)
• n is the sample size (50 patients)
Plugging in the values, we get: z = (6.5 - 7) / (2 / √50) ≈ -1.77
Step 2: Find the Critical Value and P-Value
Since this is a left-tailed test (we’re testing if the mean recovery time is less than 7 days), we compare
our calculated Z-score to the critical Z-value at the 5% significance level for a one-tailed test.
For a significance level of 0.05, the critical Z-value is approximately -1.645.
Step 3: Decision Rule
• If Z ≤ −1.645Z, we reject the null hypothesis.
• Our calculated Z-value is -1.767, which is less than -1.645.
Step 4: Conclusion
Since -1.767 < -1.645, we reject the null hypothesis at the 5% significance level.
Interpretation
The data provides sufficient evidence at the 5% significance level to support the company’s claim that
the new drug reduces the average recovery time from the flu to less than 7 days.

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Q1

Difference between Point Estimate and Interval Estimate

• A single value approximating a population parameter

Example: Sample mean (x̄) = 85

• A range of values within which the population parameter may lie

Concept of confidence interval for any estimate (Mean /

Confidence Interval = x ± z*(̄σ/√n)

1. Find the z-score for 99% confidence:

2. Calculate the margin of error:

3. Calculate the confidence interval:

95% Confidence Interval:

1. Find the z-score for 95% confidence:

2. Calculate the margin of error:

3. Calculate the confidence interval:

a) Probability that a tenant pays more than 10,500 in rent:

z = (x - μ) / σ = (10500 - 12000) / 1500 = -1

Therefore, the probability of a tenant paying more than 10,500 is:

P(x > 10500) = 1 - P(x < 10500) = 1 - 0.1587 = 0.8413

b) Probability that a tenant pays more than 14,700 in rent:

z = (x - μ) / σ = (14700 - 12000) / 1500 = 1.8

Therefore, the probability of a tenant paying more than 14,700 is:

P(x > 14700) = 1 - P(x < 14700) = 1 - 0.9641 = 0.0359

So, the answers are:

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