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Welcome to MM207 - Statistics!

Welcome to MM207 - Statistics!. Unit 6 Seminar: Inferential Statistics and Confidence Intervals. Definition Review. Population - a set of measurements Parameters described the characteristics of a population.

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Welcome to MM207 - Statistics!

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  1. Welcome to MM207 - Statistics! Unit 6 Seminar: Inferential Statistics and Confidence Intervals

  2. Definition Review Population - a set of measurements Parameters described the characteristics of a population. Sample: a subset of measurements from the populationStatistics describe the characteristics of a sample. Most of the time we do not have the entire population, we have a sample from the population. Therefore, we must use sample statistics to estimate population parameters. We use a confidence interval to estimate a population mean or a proportion.

  3. Confidence Intervals for μ or p There are two steps • Find E (MoE or margin of error). 2. Find the interval.

  4. Critical Formula σ Known • Margin of Error [E] • E = zc (σ/√n); the level of confidence is determined by the value selected for zc • C-Confidence Interval • xbar – E < µ < xbar + E • Minimum Sample Size • N = (zc*σ/E)^2

  5. Step 2: Compute the Interval The interval has a lower number and an upper number For estimating μ xbar – E < μ < xbar + E For estimating p phat – E < p < phat + E

  6. Example 1: CI for μ, n ≥ 30 n = 40 xbar = 12 σ = 5 Find the 95% CI for μ. Step 1: Find E Step 2: Find the interval Since n ≥ 30, σ known xbar – E < μ < xbar + E E = zc * σ / √[n] 12 – 1.55 < μ < 12 + 1.55 E = 1.96 * 5 / √[40] 10.45 < μ < 13.55 E = 9.8 / 6.32455532 E ≈ 1.549516054 ≈ 1.55 Use the t-table, the bottom row, to find zc = 1.96 Or use CONFIDENCE in Excel to find E

  7. Excel for Confidence IntervalSigma Known (z) This is E Alpha is the complement of the confidence interval, this is for the 80% confidence interval

  8. Critical Formula Small Samples • t-Distribution • t = [xbar - µ] / s/√n • Margin of Error [E] • E = tc (s/√n); the level of confidence is determined by the value selected for zc • C-Confidence Interval • xbar – E < µ < xbar + E • Minimum Sample Size • N = (tc*s/E)^2

  9. Example 2: CI for μ, n < 30 n = 20 df = 19 xbar = 12 s = 5 Find the 95% CI for μ. Step 1: Find E Step 2: Find the interval n < 30, σ not known xbar – E < μ < xbar + E df = 19 12 – 2.34 < μ < 12 + 2.34 E =tc * s / √[n] 9.66 < μ < 14.34 E = 2.093 * 5 / √[20] E = 10.465 / 4.472135955 E ≈ 2.340045138 ≈ 2.34 Use the t-table, df = 19, to find 2.093

  10. Excel for Confidence IntervalSmall Samples (t) E This is the function that will give you E using the t distribution

  11. z-Estimate of a Proportion • Sample proportion 0.3333 • Sample size 300 • Confidence level 0.99 • Confidence Interval Estimate0.3333 +/- 0.0701 • Lower confidence limit0.2632 • Upper confidence limit0.4034 This is a home grown procedure. Enter the data on the left. The answers will be shown in Red.

  12. Example 3: CI for p n = 400 phat = 0.6, qhat = 1 – 0.6 = 0.4 Find the 95% CI for p. nphat = 240 > 5, nqhat = 160 > 5, ok to use zc Step 1: Find EStep 2: Find the interval E = zc * √[pq / n] phat – E < p < phat + E E = 1.96 * √ [(0.6 * 0.4) / 400] 0.6 – 0.048 < p < 0.6 + 0.048 E = 1.96 * √ [0.24 / 400] 0.552 < p < 0.648 E = 1.96 * .024494897 E ≈ 0.048009998 ≈ 0.048

  13. Example 4: Choosing the Normal or t-Distribution Page 329, using the flow chart n = 25 σ = $28,000 xbar = $181,000 Normal or t-Distribution (zc or tc )? n = 18 s = $24,000 xbar = $162,000 Normal or t-Distribution?

  14. Other Topics • Finding a minimum sample size for a confidence interval • Finding zc for a confidence level • Interpreting a confidence interval • Comparing confidence intervals for a level of 90%, 95%, and 99%

  15. Finding a minimum sample size for a confidence interval Page 316 Find n for a 99% CI given σ ≈ s ≈ 10 and E = 3.2 n = [(zc * σ) / E]2 n = [2.575* 10 / 3.2]2 n = [25.75 / 3.2]2 n = [8.046875]2 n = 64.75 or 65 Note: Always round up! For example, you would round 72.1 to 73 because we need at least 72.1 for the sample size.

  16. Finding Zc for a Confidence Level Sometimes the zc for the confidence level is not provided in a table. Find the zc for an 85% CI. This zc is not in the t-table. 1/2(1 - 0.85) = 0.15/2 = 0.075 Find the z for 0.0750 in the Standard Normal Table zc = - 1.44 or zc = 1.44 Note: Use the positive zc in the formula for E.

  17. Interpreting a Confidence Interval Example 1. The interval we found is 10.45 < μ < 13.55 With 95% confidence, we can say that the population mean is between 10.45 and 13.55. Example 2. The interval we found is 9.66 < μ < 14.34 With 95% confidence, we can say that the population mean is between 9.66 and 14.34. Example 3. The interval we found is 0.552 < p < 0.648 With 95% confidence, we can say that the population proportion is between 55.2% and 64.8%.

  18. Comparing confidence intervals for a level of 90%, 95%, and 99% n = 40 xbar = 12 σ = 5 For the 90% CI, E ≈ 1.30 and the interval is 10.70 < μ < 13.30 For the 95% CI, E ≈ 1.55 and the interval is 10.45 < μ < 13.55 For the 99% CI, E ≈ 2.04 and the interval is 9.96 < μ < 14.04 As the confidence level increases, the interval width increases. We have greater confidence, but less precision in estimating μ.

  19. Have a great week!

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