Estimation and confidence intervals

•• There are two kinds of estimations:

Point estimate :
The statistic , compute from sample information, which is used to
estimate the population parameter .
The sample mean , is the point estimate of the population mean , a
sample proportion , is point estimate of , the population proportion
and S the sample standard division , is point estimate of , the
population standard division .
Confidence intervals:
A range of values constructed from sample data so that the
population parameter is likely to occur within that range at specified
probability is called the level of confidence .
For
• example , we estimate the mean yearly income for
construction worker in New York , New Jersey is 65.000 . The
range of this estimate might be from $61.000 to $69.000( we
might say that we are 90 percent sure that the mean yearly
income of construction worker in the New York , New Jersey area
is between $61.000 and $69.000.
Level of confidence+ level of significance (α ) = 1
How to find Z

Example :(1)
Given level of confidence = 95%
First: =0.475
Second
• : Use table Z = 1.96
Example (2) :
Given level of confidence = 90%
First: =0.45
Second : Use table Z = 1.64 0.4495
1.65

Example (3) :
Given level of confidence = 96%
First: =0.48
Second : Use table Z = 2.05 0.4798
2.06
 A confidence intervals for population mean
When
• the population standard deviation is known n30 (n large )
( use Z distribution ).
Confidence interval for the Population mean known :
The formula is : = Z
Example (1) :
A sample of 49 observation is taken from a normal population
with a standard deviation of 10 . The sample mean is 55 .
What is the value of the population mean? unknown
What is the best estimate ? And what is this value called?
Determine the 99 percent confidence interval for the population
mean ?
n
• = 49
10
=55

The best estimate =55

Called point estimate
How to find Z
First: =0.4950
Second : Use table Z = 2.57 0.4949
2.58 1
= Z
= 2.57
= 55 (3.675)
=• 55 3.675 58.68
Lower confidence interval
55- 3.675 51.33
Upper confidence interval
55+ 3.6714 58.68
(51.328 , 58.6714)
 Example (2)
The Bun and Run is a franchise fast –food restaurant located in
the Northeast Specializing in half – pound hamburgers , fish
sandwiches , and chicken sandwiches . Soft drinks and fresh fries
are also available .The planning department of Bun Run, reports
that the distribution of daily sales for restaurant follows the
normal distribution and that the standard deviation in $3,000 .
A sample of 40 showed the mean daily sales to be $20000 .
a) What is the population mean ?
b) What is the best estimate of the population mean ? What is
the value called ?
c) Develop at 95 percent confidence interval for the population
mean ?
d) Interpret the confidence interval ?
Solution:
•
1- The population mean is unknown , the sample mean is 20000 is the
a point estimate of the unknown population mean .
2- The best estimate of the population mean is = 20000 $
This value called a point estimate .
3- = Z
Z = 1.96 at 95 %
= 1.96
= 20000 93.04 = 20093.04
=19906.96
The confidence interval limits are :
20093.04 and 19906.96
4-We are reasonably sure that the population mean is between
20093.04 and 19906.96
LCI =19906.96
UCI = 20093.04
 Exercise (1)
A
• research firm conducted a survey to determine the mean
amount steady smokers spend on cigarettes during a week . They
found the distribution of amount spent per week followed the
normal distribution with a standard deviation of $5 .
A sample of 49 steady smokers revealed that = $20 .
a) What is the point estimate of the population mean ? Explain
what it indicates
b) Using 95 percent level of confidence interval for . Explain
what it indicates .
 A confidence intervals for a population mean
A
• confidence intervals for a population mean ,when the
population standard deviation is unknown n 30 (n small) we use t
distribution .
Confidence intervals for the = t
Population mean , unknown
The characteristics of the t distribution :
-It like z distribution , a continuous distribution .
-It like z distribution bell –shaped symmetrical .
-There is not one t distribution , but rather a family of t
distribution all t distribution have mean of 0 , but their standard
deviations differ according to the sample size ,n . There is a t
distribution for a sample size of 20 , another for a sample size of
22 , and so on .
The
• standard deviation for a t distribution with 5 observation is larger
than for a t distribution with 20 observations .
The t distribution is more spread out and flatter at the center than a
standard normal distribution . As the sample size increase , however ,
the t distribution approaches the standard normal distribution ,
because the error in using s to estimate decrease with larger samples
.
How to find t :
N-1
Level of significance
Example:
N = 17 and level of confidence 95 percent
N-1= 17-1 =16
Level of significance =100% - 95% =5%
Then t = 2.120 (from the table )
 Example (1)
Use table t to locate the value of t under the following conditions:
a) The sample size is 12 and the level of confidence 95 % .
b) The sample size is 20 and the level of confidence 90 %
c) The sample size is 17 and level of confidence 99 %

Solve :
d) n-1 = 12-1 =11
Level of confidence =95%
Then t = 2.201 (from the table )

b) n-1 = 20-1 =19

Level of confidence =90%
t = 1.729

c)N-1= 17-1 =16

Level of confidence =99%
t = 2.921
 Example (2)
• The owner of Britten's egg farm wants to estimate the mean
number of egg laid per chicken . A sample of 20 chickens
shows they laid an average of 20 eggs per month with a
standard deviation of 2 egg per month .
a) What is the value of the population mean ? What is the best
estimate of this value ?
b) Explain why we need to use t distribution . What assumption
do you need to make ?
c) For a 95 percent confidence interval , what is the value of t ?
d) Develop the 95 % confidence interval for the population
mean ?
e) Would it be reasonable to conclude that the population
mean is 21 eggs ? What about 25 eggs ?
Solve:
•
a) The population mean is unknown .
The best estimate =20
b) Because n 30
c) n-1 = 20-1= 19
α=5%
t = 2.093
d) = t
= (2.093)
= (2.093) = (2.093) = (2.093)
= (0 = 20.94
= 19.04
e)Neither value 21 nor 25 is reasonable because it is not in side
the interval.
 Exercise (1)

A title manufacturer wishes to investigate the tread life of it’s

tires . A sample of 10 tires driven 50 .000 miles revealed a
sample mean 0.32 inch of tread remaining with a standard
deviation of 0.09 inch . Construct a 95% confidence interval for
the population mean . Would it be reasonable for the
manufacturer to conclude that after 50.000 miles the population
mean amount of tread remaining is 0.30 inches?
A confidence interval for population proportion

Proportion:
• is the fraction , ratio , or present indicating the part
of the sample of the population having a particular trait or
interest .
Sample proportion :- =
The population proportion is identified by . Therefore, refers to
the percent of successes in the population .
Confidence interval for a population proportion = z
 Example (1)
The
• owner of the west End 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 at 95% confidence interval for the population
proportion ?
c) Interpret your finings?
Solve :
d) = = =0.8
e) 1- 1- 0.8 = 0.2
Z = = 0.475 1.96
= z = 1.96 = 1.96
•1.96(0.04)
= 0.078
Lower confidence interval : = 0.078= 0.722
Upper confidence interval : = 0.078= 0.878

c)We are reasonably sure that the population proportion is

between 72 and 88 percent .
 Exercise

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 , 250 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% confidence interval for population
proportion?
c) Interpret your finding ?
 Choosing an appropriate sample size
First
• sample size for estimation the population mean:
There are three factors that determine the sample size when we
wish to estimate the mean .
1-The desired level of confidence . Which is usually expressed by z .
2-The maximum allowable error , E .
3-The variation in the population expressed by .
4-The formula to determine the sample size for the mean is
Sample size for estimating the population mean : n =
Where :
n= is the size of sample .
Z =is standard normal value corresponding to the desired level of
confidence .
= is the population standard deviation .
E= is the maximum allowable error .
 Example (1)
A
• student in public administration wants to determine the mean
amount members of city councils in large cites 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 % level
the standard deviation to be $1000 .
What is the required sample size .?
How to find z: = 0.475 then z = 1.96 (from the table)
n = = =384.16 385
 Exercise

A population is estimated to have a standard deviation of 10 . We

want to estimate the population mean within 2 , with a 95% level
of confidence . How large sample is required ?
 Second : sample size for the population
proportion
There
• are three factors that determine the sample size when we
wish to estimate a proportion .
a) The desired level of confidence , which is usually expressed by
z.
2-The maximum allowable error , E .
3-The formula to determine the sample size of a proportion is:
Sample size for the population proportion : n =
An estimate of the population proportion :
1. No estimate of the population proportion is available use 0.5
 Example (1)
The
• study in the pervious example also estimate the proportion
of cities that have private refuse collectors .The student wants
the margin of error to be within 0.10 of the population
proportion , the desired level of confidence is 90% .
What is the required sample size ?
Solve:
E = 0.10 p = not available we use 0.5
=0.45 then z = 1.64 or 1.65
n = = = 68.0625
69
 Estimate to the population proportion is
available (given) 0.15 , 0.25 ….etc
Example
• (2):
The estimate of the population proportion is to be within plus or
minus 0.05 with a 95% level of confidence . The best estimate of
the population proportion is 0.15 . How large a sample is
required ?
E = 0.05 = 0.15 z = 1.96
n = = = 195.9216
196
 Exercise

Supposed the U.S president wants an estimate of the proportion

of the population who support his current policy toward
revisions in the Social Security system . The president wants the
estimate to be within 0.04 of the true proportion . Assume a 95%
level of confidence .
The presidents political advisors estimated the supporting the
current policy to be 0.60 .
a) How large of a sample is required ?
b) How large of sample would be necessary if no estimate were
available for the proportion current policy .