Dr. Saeed A. D. Alghamdi
Statistics Department
Faculty of Sciences
Building 90, Room 26F41
King Abdulaziz University
http://saalghamdy.kau.edu.sa
Statistical Techniques in
Business & Economics
Fourteenth Edition
Douglas A. Lind
William G. Marchal
Samuel A.Wathen
Copyright © 2012 by The McGraw–Hill Companies, Inc. All rights reserved.
Estimation and
Confidence Intervals
Chapter 9
McGraw–Hill/Irwin Copyright © 2012 by The McGraw–Hill Companies, Inc. All rights reserved.
Learning Objectives
LO1 Define point and confidence interval estimates.
LO2 Define level of confidence.
LO3 Compute a confidence interval for the population
mean when the population standard deviation is
known.
LO4 Compute a confidence interval for a population mean
when the population standard deviation is unknown.
LO5 Compute a confidence interval for a population
proportion.
LO6 Adjust a confidence interval for finite populations
LO7 Calculate the required sample size to estimate a
population proportion or population mean.
9-4
Modified by Dr. Saeed A. D. Alghamdi, Statistics Department, Faculty of Sciences, KAU
Sampling and Estimates
Why Use Sampling?
1. To contact the entire population is too time consuming.
2. The cost of studying all the items in the population is often too expensive.
3. The sample results are usually adequate.
4. Certain tests are destructive.
5. Checking all the items is physically impossible.
Point Estimate versus Confidence Interval Estimate
•A point estimate is a single value (point) derived from a sample and used to
estimate a population value.
•A confidence interval estimate is a range of values constructed from sample
data so that the population parameter is likely to occur within that range at a
specified probability. The specified probability is called the level of confidence.
What are the factors that determine the width of a confidence interval?
1.The sample size, n.
2.The variability in the population, usually σestimated by s.
3.The desired level of confidence.
9-5
LO1 Define point and confidence interval estimates.
Modified by Dr. Saeed A. D. Alghamdi, Statistics Department, Faculty of Sciences, KAU
Interval Estimates –Interpretation
For a 95% confidence interval, about 95% of the similarly constructed intervals
will contain the parameter being estimated. Also 95% of the sample means for
a specified sample size will lie within 1.96 standard deviations of the
hypothesized population
9-6
LO2 Define level of confidence.
Modified by Dr. Saeed A. D. Alghamdi, Statistics Department, Faculty of Sciences, KAU
How to Obtain z value for a Given Confidence Level
The 95 percent confidence refers to
the middle 95 percent of the
LO2 Define level of confidence.
