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Statistics : estimation

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Due on ?, 2017

LEARNING OUTCOMES

After completing the second part of this chapter, students will be able

to:

(LO 2) explain the difference between point estimates and confidence

intervals for estimating a population parameter

(LO 3) construct and interpret confidence interval estimates for the mean

(variance known and unknown)

(LO 4) describe the characteristics of Students t distribution.

(LO 5) use the Students t distribution to solve business problems.

(LO 6) construct and interpret confidence interval estimates for population

proportion (large samples)

(LO 7) construct confidence interval estimates for the variance of a normal

distribution

(LO 8) determine the required sample size to obtain a desired margin of

error for large populations

Conceptual Questions

1. Explain why the critical value for a given confidence level when the population variance is not

known is always greater than the critical value for the same confidence level when the

population variance is known.

2. When we need to estimate the population mean, and the population standard deviation is

unknown, we are hit with a double whammy when it comes to the margin of error. Explain

what the double whammy is and why it occurs. (Hint: Consider the sources of variation in

the margin of error.)

3. An insurance company in Iowa recently conducted a survey of its automobile policy

customers to estimate the mean miles these customers commute to work each day. The result

based on a random sample of 300 policyholders indicated the population mean was between

3.5 and 6.7 miles. This interval estimate was constructed using 95% confidence.

After receiving this result, one of the managers was overheard telling a colleague that 95% of

all customers commute between 3.5 and 6.7 miles to work each day. How would you respond

to this statement? Is it correct? Why or why not? Discuss.

4. Examine the equation for the margin of error when estimating a population mean

e z / 2

n

Indicate the effect on the margin of error resulting from an increase in each of the following

items:

a. confidence level

b. z-value

c. standard deviation

d. sample size

e. standard error

5. What are the advantages of using interval estimation rather than point estimation?

6. Draw a sampling distribution of an unbiased estimator.

7. Draw a sampling distribution of a biased estimator.

8. Draw a diagram that shows the sampling distribution representing two unbiased estimators,

one of which is relatively efficient.

9. The following statement was made by an expert in statistics. If a sample of size 9 is chosen

from a normal distribution having mean , then we can be 95 percent certain that will lie

X 1.96.s / n X

within where is the sample mean and s is the sample standard deviation.

Is this statement correct? Justify your answer.

10. What is the difference between the student and standard normal distribution.

11. Consider the t-distribution with 10 degrees of freedom, find a so that P (t < a) = 0.95.

12. Consider the t-distribution with 15 degrees of freedom, find b so that P (t > b) = 0.025.

13. Consider the t-distribution with 10 degrees of freedom, use the t table to approximate P(t > 3).

14.A confidence interval was used to estimate the proportion of statistics

students who are female. A random sample of 72 statistics students

generated the following confidence interval: (.438, .642). Using the

information above, what sample size would be necessary if we wanted to

estimate the true proportion to within 3% using 99% reliability?

MCQs

(a) A confidence interval is an interval of values computed from

sample data that is likely to include the true population value.

(b) An approximate formula for a 95% confidence interval is sample

estimate margin of error.

(c) A confidence interval between 20% and 40% means that the

population proportion lies between 20% and 40%.

(d) A 99% confidence interval procedure has a higher probability of

producing intervals that will include the population parameter than a

95% confidence interval procedure.

2. Which statement is not true about the 95% confidence level?

(a) Confidence intervals computed by using the same procedure will

include the true population value for 95% of all possible random

samples taken from the population.

(b) The procedure that is used to determine the confidence interval

will provide an interval that includes the population parameter with

probability of 0.95.

(c) The probability that the true value of the population parameter

falls between the bounds of an already computed confidence

interval is roughly 95%.

(d) If we consider all possible randomly selected samples of the

same size from a population, the 95% is the percentage of those

samples for which the confidence interval includes the population

parameter.

3. A 90% confidence interval for the mean percentage of airline reservations

being canceled on the day of the flight is (1.1%, 3.2%). What is the point

estimator of the mean percentage of reservations that are canceled on the

day of the flight?

(a)1.05%

(b) 2.15%

(c) 2.1%

(d) 1.60%

4. The real estate industry claims that it is the best and most effective

system to market residential real estate. A survey of randomly selected

home sellers in Illinois found that a 95% confidence interval for the

proportion of homes that are sold by a real estate agent is 69% to 81%.

Interpret the interval in this context.

(a) In 95% of the years, between 69% and 81% of homes in Illinois

are sold by a real estate agent.

(b) 95% of all random samples of home sellers in Illinois will show

that between 69% and 81% of homes are sold by a real estate

agent.

(c) If you sell a home in Illinois, you have an 75% 6% chance of

using a real estate agent.

(d) We are 95% confident that between 69% and 81% of homes in

this survey are sold by a real estate agent.

(e) We are 95% confident, based on this sample, that between 69%

and 81% of all homes in Illinois are sold by a real estate agent.

5. The real estate industry claims that it is the best and most effective

system to market residential real estate. A survey of randomly selected

home sellers in Illinois found that a 99% confidence interval for the

proportion of homes that are sold by a real estate agent is 70% to 80%.

Explain what "99% confidence" means in this context.

(a) In 99% of the years, between 70% and 80% of homes in Illinois

are sold by a real estate agent.

(b) About 99% of all random samples of home sellers in Illinois will

produce a confidence interval that contains the true proportion of

homes sold by a real estate agent.

(c) There is a 99% chance that the true proportion of home sellers in

Illinois who sell their home with a real estate agent is between 70%

and 80%.

(d) 99% of home sellers in Illinois will sell their home with a real

estate agent between 70% and 80% of the time.

(e) About 99% of all random samples of home sellers in Illinois will

find that between 70% and 80% of homes are sold by a real estate

agent.

6. Sales of a new line of athletic footwear are crucial to the success of a

company. The company wishes to estimate the average weekly sales of the

new footwear to within $300 with 90% reliability. The initial sales indicate

that the standard deviation of the weekly sales figures is approximately

$1100. How many weeks of data must be sampled for the company to get

the information it desires?

(a) 7 weeks

(b) 37 weeks

(c) 23 weeks

(d) 10,915 weeks

7. An educator wanted to look at the study habits of university students. As

part of the research, data was collected for three variables - the amount of

time (in hours per week) spent studying, the amount of time (in hours per

week) spent playing video games and the GPA - for a sample of 20 male

university students. As part of the research, a 95% confidence interval for

the average GPA of all male university students was calculated to be:

(2.95, 3.10). Which of the following statements is true?

(a) In construction of the confidence interval, a t-value with 20

degrees of freedom was used.

(b) In construction of the confidence interval, a z-value was used.

(c) In construction of the confidence interval, a t-value with 19

degrees of freedom was used.

(d) In construction of the confidence interval, a z-value with 20

degrees of freedom was used.

8. Find the value of t0 such that the following statement is true: P(-t 0 t t0)

= .95 where the number of degrees of freedom df is equal to 15

(a) 2.602

(b) 2.947

(c) 2.131

(d) 1.753

9. A confidence interval was used to estimate the proportion of statistics

students who are female. A random sample of 72 statistics students

generated the following confidence interval: (.438, .642). Using the

information above, what sample size would be necessary if we wanted to

estimate the true proportion to within 3% using 99% reliability?

(a) 1916

(b) 1831

(c) 1769

(d) 1842

10.What is the confidence level of the following confidence interval for ?

x 2.33 / n

(a) 233%

(b) 67%

(c) 98%

(d) 78%

Exercise #1

clerical workers at the corporations central office during the year. A random

sample of 25 clerical workers reveals the following:

X 9.7 s 4.0

Absenteeism: days, days.

12 clerical workers were absent more than 10 days.

absences for clerical workers during the year. Interpret. (Hint: Assume that

the population is normally distributed)

of clerical workers absent more than 10 days during the year. Interpret.

4. Suppose that the personnel director also wishes to take a survey in a

branch office. What sample size is needed to have 95% confidence in

estimating the population mean absenteeism to within 1.5 days if the

population standard deviation is estimated to be 4.5 days? ((Hint: Assume

that the population is normally distributed)

Exercise #2

According to Gallups poll on consumer behavior, 36% of Americans say they will

consider only cars manufactured by an American company when purchasing a

new car. (Data extracted from The Gallup Poll, www.gallup.com, March 31, 2010.)

If you select a random sample of 200 Americans,

1. What are the population, the variable of interest and the parameter(s)?

2. What is the sample statistic(s)?

3. What is the distribution of the sample statistic defined in question 2. (Hint.

Check the conditions to obtain its distribution)

4. What is the probability that the sample will have between 30% and 40%

who say they will consider only cars manufactured by an American

company when purchasing a new car?

Exercise #3

dental plan as part of the benefits package. The question is: How much does a

typical employee and his or her family spend per year on dental expenses? A

sample of 45 employees reveals the mean amount spent last year was $1,820,

with a standard deviation of $660.

1. What are the population, the variable of interest and the parameter(s)?

2. Construct a 95 percent confidence interval for the population mean.

3. The information from part (2) was given to the president of Electronics, Inc.

He indicated he could afford $1,700 of dental expenses per employee. Is it

possible that the population mean could be $1,700? Justify your answer.

Exercise #4

A market researcher for a consumer electronics company wants to study the television viewing habits

of residents of a particular area. A random sample of 40 respondents is selected, and each respondent

is instructed to keep a detailed record of all television viewing in a particular week. The results are as

follows:

X 15.3 s 3.8

Viewing time per week: hours, hours.

27 respondents watch the evening news on at least three week nights.

1. Construct a 95% confidence interval estimate for the mean amount of television watched per

week in this area.

2. Construct a 95% confidence interval estimate for the population proportion who watch the

evening news on at least three weeknights per week.

Suppose that the market researcher wants to take another survey in a different location. Answer this

question:

3. What sample size is required to be 95% confident of estimating the population mean viewing

time to within hours assuming that the population standard deviation is equal to five hours?

Exercise #5

know the amount of time children spend watching television because the types

and number of programs and commercials are greatly influenced by this

information. As a result, it was decided to survey 100 North American children

and ask them to keep track of the number of hours of television they watch each

week. The results of the survey are

Descriptive Statistics: Time

Time 100 0 27,191 8,373 9,500 50,300

1. What are the population, the variable of interest and the objective of the

survey?

The television sponsors want an estimate of the amount of television watched by

the average North American child. A confidence level of 95% is judged to be

appropriate.

2. What are the population parameter(s) and sample statistic(s) considered to

reach the objective of the survey.

3. What is the distribution of the random variable that will be used to

construct the confidence interval in question 4. (Hint. State the

condition(s) to obtain its distribution)

4. Construct a 95% confidence interval estimate of the parameter defined in

question 2.

5. Interpret the confidence interval estimate obtained in question 4.

6. Use the following histogram to check the assumption stated in question 3.

7. Some people erroneously interpret the confidence interval estimate to

IC1 ( ) a, b 1

mean, , that there is probability that the population

mean lies between a and b. Explain.

Exercise #6

number of remote control devices American homes contain. It is assumed that

this number is normally distributed. The company hired a statistician to survey

240 randomly selected homes and determine the number of remote controls. The

results are reported in Table 3.

2. Estimate with 95% confidence the average number of remote controls in

the United States.

3. If there are 100 million households, estimate with 95% confidence the total

number of remote controls in the United States.

Valid N (listwise) 240

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