STATISTICS FOR SOCIAL SCIENCES

BUS 152
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CONFIDENCE INTERVAL ESTIMATION
Part1

8.1 Confidence Interval Estimate for the Mean (σ Known)

Problem 1 (8.1)
SOLUTION:
For 95% Confidence level,
1 - α = 0.95
α = 0.05
α /2 = 0.025 ---> Standard Normal Table ---> Z= -1.96
σ 8
X ± Z⋅ = 85 ± 1.96 ⋅ 83.04 ≤ µ ≤ 86.96
n 64
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Problem 2 (8.3)
SOLUTION:
If all possible samples of the same size n are taken, 95% of them include the true
population average monthly sales of the product within the interval developed. Thus you
are 95 percent confident that this sample is one that does correctly estimate the true
average amount.
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Problem 3 (8.7)
SOLUTION:
a) For 99% Confidence level,
1 - α = 0.99
α = 0.01
α /2 = 0.005 ---> Standard Normal Table ---> Z= -2.58
σ 0.02
X ± Z⋅ = 0.995± 2.58⋅ 0.9877 ≤ µ ≤ 1.0023
n 50
b) Since the value of 1.0 is included in the interval, there is no reason to believe
that the mean is different from 1.0 gallon.
c) No. Since σ
is known and n = 50, from the Central Limit Theorem, we may assume
that the sampling distribution of X is approximately normal.
d) For 95% Confidence level,
1 - α = 0.95
α = 0.05
α /2 = 0.025 ---> Standard Normal Table ---> Z= -1.96

The reduced confidence level narrows the width of the confidence interval.
σ 0.02
a) X ± Z⋅ = 0.995± 1.96 ⋅ 0.9895 ≤ µ ≤ 1.0005
n 50
b) Since the value of 1.0 is still included in the interval, there is no reason to
believe that the mean is different from 1.0 gallon.
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Problem 4 (8.9)
SOLUTION:
a) For 95% Confidence level,
1 - α = 0.95
α = 0.05
α /2 = 0.025 ---> Standard Normal Table ---> Z= -1.96
σ 0.05
X ± Z⋅ = 1.99 ± 1.96 ⋅ 1.9802 ≤ µ ≤ 1.9998
n 100
b) No. Since σ is known and n = 100, from the central limit theorem, we may assume
that the sampling distribution of X is approximately normal.
c) An individual value of 2.02 is only 0.60 standard deviation above the sample mean
of 1.99. The confidence interval represents bounds on the estimate of the
average of a sample of 100, not an individual value.
d) A shift of 0.02 units in the sample average shifts the confidence interval by the
same distance without affecting the width of the resulting interval.
σ 0.05
a) X ± Z⋅ = 1.97 ± 1.96 ⋅ 1.9602 ≤ µ ≤ 1.9798
n 100
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8.2 Confidence Interval Estimation for the Mean (σ Unknown)

Problem 5 (8.11)
SOLUTION:
For 95% Confidence level,
1 - α = 0.95
α = 0.05
α /2 = 0.025
d.f. = 36-1 = 35 ---> Table of Critical Value of t ---> t= 2.0301
S 24
X ±t⋅ = 75 ± 2.0301 ⋅ 66.8796 ≤ µ ≤ 83.1204
n 36
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Problem 6 (8.15)
SOLUTION:
a) For 95% Confidence level,
1 - α = 0.95
α = 0.05
α /2 = 0.025
d.f. = 20-1 = 19 ---> Table of Critical Value of t ---> t= 2.0930
S 0.32
X ±t⋅ = 1.67 ± 2.0930 ⋅ $1.52 ≤ µ ≤ $1.82
n 20
b) The store owner can be 95% confident that the population mean retail value of
greeting cards that the store has in its inventory is somewhere in between $1.52
and $1.82. The store owner could multiply the ends of the confidence interval by
the number of cards to estimate the total value of her inventory.
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Problem 7 (8.19)
SOLUTION:
a) For 95% Confidence level,
1 - α = 0.95, α = 0.05, α /2 = 0.025
d.f. = 26-1 = 25 ---> Table of Critical Value of t ---> t= 2.0595
S 3.0554
X ±t⋅ = 7.1538 ± 2.0595 ⋅ 5.92 ≤ µ ≤ $8.39
n 26
b) You can be 95% confident that the population mean monthly service fee, if a customer’s
account falls below the minimum required balance, is somewhere between $5.92 and $8.39.
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Problem 7 (8.22)
SOLUTION:
S 44.2700
a) X ±t⋅ = 182.4 ± 2.0930 ⋅ $161.68 ≤ µ ≤ $203.12
n 20
S 10.0263
b) X ±t⋅ = 45 ± 2.0930 ⋅ $40.31 ≤ µ ≤ $49.69
n 20

c) The population distribution needs to be normally distributed.

d)

Normal

300

250
Box-an
200
Hotel

150

100
 Both the normal probability plot and the box-and-whisker show that the
population distribution for hotel cost is not normally distributed and is skewed to
the right.

8.22 d)
cont.

Norm

80

70

60 Box
50
Cars

40
Both the normal probability plot and the box-and-whisker show that the
population distribution for rental car cost is not normally distributed and is
skewed to the right.
30
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20

10