review of normal distribution. exercise solution
TRANSCRIPT
Review of normal distribution
• If x is normally distributed with mean
and standard deviation then with probability 0.95, x will lie in the interval
ExerciseAssume x is normal distributed with mean and standard deviation Find an interval in which x is guaranteed to lie with probability 0.90.
Solution
Assume x is normal distributed with meanand standard deviation Find an interval in which x is guaranteed to lie with probability 0.90.
We want 10% of the area under the curve to lie outside this interval, leaving 5% to lie above the interval. We therefore determine z so that the area under the standard normal curve lying between 0 and z equals 0.45 (a picture helps). The result is z = 1.645.
Conclusion: With probability 0.90, the value of x will lie in the interval
Review of sampling distributions•
Review•
Review of the Central Limit Theorem
Take ANY random variable X and compute m and sfor this variable. If samples of size n are randomly selected from the population, then:
1) For large n, the distribution of the sample means, will be approximately a normal distribution,
2) The mean of the sample means will be the population mean m and
3) The standard deviation of the sample means will be
n
Restatement
The Sampling Distribution of X and the Central Limit Theorem
Assume a population with = 80, = 6. If a sample of 36 is taken from this population, what is the probability that the sample mean is larger than 82?
Sketch the curve of x and identify area of interest
The Sampling Distribution of X and the Central Limit Theorem
Convert 82 to z value
First, calculate the standard deviation of the sampling distribution
Then calculate the z value
Use the tables to find probability of interest
82 802
1x
x
xz
61.0
36x n
82 ( 2) .5 .4772 .0228P x P z
Example
Suppose you took a sample of 100 accounts from Visa and found the mean balance was $213.
What can you say about the mean balance of ALL Visa accounts.
Example
Suppose you took a sample of 100 accounts from Visa and found the mean balance was $213.
What can you say about the mean balance of all VISA accounts?
ANS: That it is approximately $213. (This is called a point estimate).
ExampleSuppose you took a sample of 100 accounts from Visa and found the mean balance was $213.
What can you say about the average balance of all VISA accounts?
ANS: That it is approximately $213. (This is called a point estimate).
We would LIKE an interval estimate, i.e., an interval in which we will have confidence that the true value of the population mean lies.
Example continued
•
Example continued
•
Interpretation
• If samples of size 100 were taken respectively, then with probability 0.95 (i.e., 19 times out of 20), the true value of the population mean would be included in the interval constructed using the procedure outlined above.
Possible was in which this would be stated in a news report
A recent survey of 100 Visa accounts showed that the average Visa account is $213. This finding is valid with a margin of error of $21.95 with 95% confidence.
This means that if the survey were repeated many times, 19 times out of 20 the true mean would lie in the interval obtained.
General Confidence Intervals
A confidence interval (or interval estimate) is a range of values that estimates the true value of the population parameter.
This is associated with a degree of confidence, which is a measure the probability that a randomly selected confidence interval encloses the population parameter.
Confidence LevelThe confidence level is equal to 1- , and is split between the two tails of the distribution
Usually the confidence level is:
90% (meaning )
95% (meaning ) OR
99% (meaning )
10.05.01.
Confidence Intervals
The Confidence Interval is often expressed as:
E is called the margin of error.
For samples of size > 30,
nzxzx
Ex
x
22
n
szx 2
Typical values for 95% confidence interval
90% confidence interval
NOTEIf you increase the confidence level, the size of the confidence interval increases.
This makes sense. If the a sample of 100 students is taken and the mean age computed, I would probably be very confident the mean age is between 18 and 24, but less confident the mean age is between 20 and 22.
Example
Suppose you took a sample of 100 accounts from Visa and found the mean balance was $213. If in addition you know the standard deviation for all accounts is $112, what can you say about the average balance of all VISA accounts? Build a 95% confidence interval.
Example
Suppose you took a sample of 100 accounts from Visa and found the mean balance was $213. If in addition you know the standard deviation for all accounts is $112, what can you say about the average balance of all VISA accounts? Build a 95% confidence interval.
95.21213
Example
Suppose you took a sample of 100 accounts from Visa and found the mean balance was $213. If in addition you know the standard deviation for all accounts is $112, what can you say about the average balance of all VISA accounts? Build a 90% confidence interval.
100
112645.1213
Example
Suppose you took a sample of 100 accounts from Visa and found the mean balance was $213. If in addition you know the standard deviation for all accounts is $112, what can you say about the average balance of all VISA accounts? Build a 90% confidence interval.
42.18213100
112645.1213
Example
Suppose you took a sample of 100 accounts from Visa and found the mean balance was $213. If in addition you know the standard deviation for all accounts is $112, what can you say about the average balance of all VISA accounts? Build a 99% confidence interval.
100
112575.2213
Example
Suppose you took a sample of 100 accounts from Visa and found the mean balance was $213. If in addition you know the standard deviation for all accounts is $112, what can you say about the average balance of all VISA accounts? Build a 99% confidence interval.
84.28213100
112575.2213
Age of STFX Students
Find the 90% confidence interval for the mean.
0.10 50n ,6.2 ,4.21 sx
Age of STFX Students
Find the 90% confidence interval for the mean.
22.0 20.850
6.24.21 50
6.24.21
0.10 50n ,6.2 ,4.21
05.005.0
22
zz
nzx
nzx
sx
Sample Size
The sample size needed to estimate m so as to be (1-a)*100 % confident that the sample mean does not differ from m more than E is:
…round up
2
2
E
zn