Review

Normal Distribution
The next 4 questions are based on the following data:

A firm's marketing manager believes that total sales for next

year can be represented by a normal distribution, with a mean
of $2.5 million and a standard deviation of $300,000. The
firm has fixed costs of $1.8 million.

Question 1

What is the probability that the firm's sales will be less than
$3.0 million?
a) 0.9522
b) 0.0133
c) 0.0000
d) 0.8599
e) None of the above
A firm's marketing manager believes that total sales for next
year can be represented by a normal distribution, with a mean
of $2.5 million and a standard deviation of $300,000. The firm
has fixed costs of $1.8 million.
Question 2

What is the probability that the firm will have sufficient sales to cover fixed
costs?
a) 0.9902

b) 0.0098

c) 0.2743

d) 0.1306

e) None of the above

A firm's marketing manager believes that total sales for next
year can be represented by a normal distribution, with a
mean of $2.5 million and a standard deviation of $300,000.
The firm has fixed costs of $1.8 million.

Question 3

What is the probability that the

firm's sales will be within $150,000
of the expected, i.e. mean, sales?
a) 0.3829
b) 0.0325
c) 0.3503
d) 0.5478
e) None of the above
A firm's marketing manager believes that total sales
for next year can be represented by a normal
distribution, with a mean of $2.5 million and a
standard deviation of $300,000. The firm has fixed
costs of $1.8 million.
Question 4

Determine the sales level that has only a 9% chance of being

exceeded
a) $2.9 million
b) $2.1 million
c) $3.65 million
d) $1.78
e) None of the above
SAMPLING DISTRIBUTION of the
Sample Mean
Chapter 8
 Reason for sampling
Selecting a sample is less time consuming
Selecting a sample is less costly
Analysing a sample less cumbersome and
more practical
.than the entire POPULATION
 Types of Samples

When selecting a sample, researcher must be careful that the sample is a fair
Representative of the population.
SAMPLING DISTRIBUTION of the Sample Mean
Sampling distribution: the probability distribution of a statistic is
called its sampling distribution

Suppose we compute a statistic , for example the mean for each

sample. The probability distribution of this statistic is called a
sampling distribution.
Each sample has its own average value.
Sample means vary from sample to sample.
And the distribution of these averages
is called the "sampling distribution of the sample mean
Suppose that we draw all possible samples of size n from a given
population. POPULATION
Population Size N
Population Mean
Population stdev

Sample 1 Sample 2
Sample mean =n 1 Sample mean =n 2
Sample mean = 1 Sample mean = 2
Sample Std dev= s1 Sample Std dev= s2

Sample 3
Sample mean =n 3
Draw several sample Sample mean = 3
Of the same size from Sample Std dev= s3
The population

N: The number of observations in the population.

n: The number of observations in the sample.
 Test your understanding
Taking repeated samples of a given size, finding
each samples mean, and then plotting the
distribution of all the sample means produces a:
a) Normal Distribution
b) Poisson distribution
c) Binomial distribution
d) Sampling distribution
e) Z-score distribution
 Why is the Sampling Distribution of
Sample means important?
Sampling distributions are an important part of
study for a variety of reasons. Sampling distribution
is the probability distribution of a sample of a
population instead of the entire population.
Example:
How can the marketing department formulate a
marketing strategy from a sample of 30
customers who responded to the survey?
How can the school adopt the new curriculum
based on a sample of students feedback?
 Notation
is the mean of the original population
x is the mean of the sampling distribution of
mean
is the Standard deviation of the original
population
x is the standard deviation of the sampling
distribution of mean.
 Example

The following example illustrates the

construction of a sampling
distribution of the sample mean
ABC company has 7 production employees, considered the population. The hourly earnings of
each employee are given in the Table below.

Employee Hourly Earnings ($)

April 9
Tom 10
Jack 9
Sam 10
Bob 9
Art 11
Mary 10

1. What Is the population mean?

2. What is the sampling distribution of the sample mean for samples of size 2?
3. What is the mean of the sampling distribution?
4. What observations can be made about the population and the sampling distribution
ABC company has 7 production employees, considered the population. The hourly earnings of
each employee are given in the Table below.

Employee Hourly Earnings ($)

Joe 9
Sam 9
Sue 10
Bob 10
Jan 9
Art 10
Ted 11

1. What Is the population mean?

9+10+9+10+9+11+10
= =$9.71
7
NOTE: We identify the population mean with Greek letter

Suppose that we draw all possible samples of size n=2 from a given population.
 To arrive at the sampling distribution of the sample mean,
ALL POSSIBLE SAMPLES of 2 were selected without replacement from the
population.
7!
There are 21 possible: = = 21
2! 72 !
Select samples of 2 employees without replacement from the population. There are 21 possible samples
Sample Assistant Hourly Earnings ($) Sample Mean, X
1 Joe,Sam 9 9 9
2 Joe,Sue 9 10 9.50
3 Joe,Bob 9 10 9.50
4 Joe,Jan 9 9 9
5 Joe,Are 9 10 9.50
6 Joe, Ted 9 11 10.00
7 Sam, Sue 9 10 9.50
8 Sam, Bob 9 10 9.50
9 Sam, Jan 9 9 9
10 Sam, Art 9 10 9.50
11 Sam, Ted 9 11 10.00
12 Sue, Bob 10 10 10
13 Sue, Jan 10 9 9.50
14 Sue, Art 10 10 10
15 Sue, Ted 10 11 10.50
16 Bob, Jan 10 9 9.50
17 Bob, Art 10 10 10
18 Bob, Ted 10 11 10.50
19 Jan, Art 9 10 9.50
20 Jan,Ted 9 11 10.00
21 Art, Ted 10 11 10.50
 Mean of the distribution of X

The population mean

9+10+9+10+9+11+10
= =$9.71
7

The mean of X
9+10+9+10+9+11+10
= =$9.71
7

Conclusion: =
Standard error of mean
Shape of the distribution of X
 Sampling Distribution of Sample Means
Given a population with a mean of and a standard deviation of ,
the sampling distribution of the mean has the following:

1. State the mean of the sampling distribution of the mean

The mean, x , of the population of all possible sample
means equals , the mean of the population of
individual measurements.
Note: x =
2. Compute the standard error of the mean

=x
n
3. State the central limit theorem
3a. If population is normal, is normal
3b. If population is not normal, is normal if sample
size is large enough (n 30)
Distribution of X : This distribution has mean, and standard deviation

X is a continuous variable such

as height, weight, income, etc.

Distribution of X (Average) : This distribution has mean, and standard deviation

=
X denotes average height,
average weight, average income,
etc.

X
= This mean has a subscribe X-bar to denote that it is from the
distribution of X-bar (X) . X-bar stands for sample mean
 Distribution of X

X is a continuous variable such

as height, weight, income, etc.

X

Distribution of X (Average)

X denotes average height,
average weight, average income,
etc.

X

 Test your understanding
The standard deviation of the sampling
distribution of the mean is:
a) The standard error
b) Dont know
c) 1
d) The standard error times the sample size
e) Approximately 68%
 Test your understanding
The population mean of life insurance per household is $110,000
with standard deviation of $40,000. The distribution is positively
skewed.
What is the mean of the distribution of sample mean ?

a) $110,000
b) Cannot be determined
c) $40,000
d) None of the above
 Test your understanding
The population mean of life insurance per household is $110,000
with standard deviation of $40,000. The distribution is positively
skewed.
With a random sample of 50 households, what is the standard
error of the mean ?

a) 5656.85
b) Cannot be determined
c) 40,000
d) 800
e) None of the above
 Test your understanding
The population mean of life insurance per household is $110,000 with
standard deviation of $40,000. The distribution is positively skewed.
Suppose that you selected 50 samples of households, what is the
expected shape of the distribution of the sample mean?

a) n>30, apply central limit theorem. The distribution of sample

mean is normally distributed
b) It is positively skewed because the population distribution is
positively skewed
c) The distribution of sample mean will never be normal
d) None of the above
 Test your understanding
The population mean of life insurance per household is $110,000
with standard deviation of $40,000. The distribution is positively
skewed.
Suppose that you selected 50 samples of households, what is the
probability that the sample mean is at least $112,000?

a) 0.3618
b) 0.4801
c) 0.5
d) None of the above
 CLT
The central limit theorem states that the
sampling distribution of any statistic will be
normal or nearly normal, if the sample size is
large enough.
How large is "large enough"? As a rough rule of
thumb, many statisticians say that a sample size
of 30 is large enough. If you know something
about the shape of the sample distribution, you
can refine that rule. The sample size is large
enough if any of the following conditions apply.
 See Figure 8.5

Sampling Distribution of the mean

for different populations for samples
of n=2, 5, and 30
Central Limit Theorem
Note that the spread of the sampling
distribution of the mean decreases as the
sample size increases.
 Conclusion regarding CLT
1. For most population distributions, regardless of
shape, the sampling distribution of the sample
mean is approximately normally distributed if the
samples of at least size 30 are selected.
2. If the population distribution is fairly symmetric, the
sampling distribution of the mean is approximately
normal for samples as small as size 5.
3. If the population is normally distributed, the
sampling distribution of the mean is normally
distributed regardless of the sample size.
The CLT is very importance in using
statistical inference to draw
conclusions about a population. It
allows you to make inferences
about the population mean without
having to know the specific shape
of the population distribution.
 Summary
Suppose from a given population you take all possible samples of
size n and compute a statistic (say mean) of all these samples. If you
then prepare a probability distribution of this statistic, you will get a
sampling distribution of sample means
The properties of sampling distribution can vary depending on how
small the sample relative to the population. The population is
assumed to be normally distributed then the sampling distribution
of mean will be normally distributed. If the population is not
normally distributed, and if the sample size is large enough (apply
CLT), the sampling distribution will also be nearly normal.
If this is the case, then the sampling distribution can be totally
determined by two
values - the mean and the standard
deviation = . These two parameters are important to

compute for the probability that average takes on some values.
 Test your understanding
Recent studies indicate that all 50-year-old woman spends an average
of $350 per year for personal care products with a standard deviation
of $25. The distribution of the amounts spent is positive skewed. We
select a random sample of 40 women.
We select s random sample of 40 women.
Is the distribution of sample mean normally distributed? How to you
know?

a) n>30, apply central limit theorem. The distribution of sample

mean is normally distributed
b) It is positively skewed because the population distribution is
positively skewed
c) The distribution of sample mean will never be normal
d) None of the above
 Question 1
Assume that a school district has 20,000 7th graders. In this district, the
average weight of a 7th grader is 90 pounds, with a standard deviation
of 20 pounds. Suppose you draw a random sample of 60 students.

Assume that the weight of a 5th grader is normally distributed, what is

the probability that the weight of a student will be more than 100
pounds?
a) What is the probability that the average weight of a sampled
student will be less than 80 pounds?
b) What is the probability that the average weight of a sampled
student will be more than 100 pounds?
c) What is the probability that the average weight of a sampled
student will be between 80 and 95 pounds?
d) What is the maximum average weight of the lightest 20% ?
e) What is the minimum average weight of the heaviest 20%?
The next 3 questions are based on the following data:
Commuting times for students at an urban college have
been found to be normally distributed with a mean of
50.0 minutes and a standard deviation of 15.0 minutes.

Question 1
What is the probability that a student will take from 50 to
60 minutes to get to college?
a) 0.2475
b) 0.0579
c) 0.5467
d) 0.0833
e) None of the above
The next 3 questions are based on the following data:
Commuting times for students at an urban college have
been found to be normally distributed with a mean of
50.0 minutes and a standard deviation of 15.0 minutes.

Question 2
Suppose a sample of 25 students is selected. What is the
probability that their average commuting time will be
between 45 and 55 minutes?
a) 0.9044
b) 0.2611
c) 0.0624
d) 0.8503
e) None of the above
The next 3 questions are based on the following data:
Commuting times for students at an urban college have been
found to be normally distributed with a mean of 50.0 minutes
and a standard deviation of 15.0 minutes.

Question 3

Suppose a sample of 25 students is selected. There is a 99.5%

chance that their average commuting time will be between
what two values symmetrically distributed about the mean?
a) 41.6 and 58.42 minutes
b) 7.89 and 92.11 minutes
c) -125.35 and 155.35 minutes
d) 13.07 and 43.07 minutes
e) None of the above
The next 5 questions are based on the following data:
An orange juice producer buys all their oranges from one
particular orchard. The amount of juice from the oranges is
approximately normally distributed with a mean of 147.0 ml.
and a standard deviation of 40.0 ml.

Question 1.

What is the probability that an orange will have from 150.0 to

200.0 ml. of juice?
a) 0.3775
b) 0.7593
c) 0.0973
d) 0.6483
e) None of the above
The next 5 questions are based on the following data:
An orange juice producer buys all their oranges from one
particular orchard. The amount of juice from the oranges is
approximately normally distributed with a mean of 147.0 ml.
and a standard deviation of 40.0 ml.

Question 2

What is the probability that an orange will have less than 175
ml. of juice?
a) 0.7580
b) 0.2419
c) 0.6630
d) 0.7379
e) None of the above
 The next 5 questions are based on the following data:
An orange juice producer buys all their oranges from one
particular orchard. The amount of juice from the oranges is
approximately normally distributed with a mean of 147.0 ml.
and a standard deviation of 40.0 ml.

Question 3.

What minimum amount of juice is in the largest 15% of the

oranges?
a) 188.5 ml
b) 105.54 ml
c) 120.76 ml
d) 83.78 ml
e) None of the above
The next 5 questions are based on the following data:

An orange juice producer buys all their oranges

from one particular orchard. The amount of juice
from the oranges is approximately normally
distributed with a mean of 147.0 ml. and a standard
deviation of 40.0 ml.

Question 4.

What percent of the oranges have at least 100.ml.

of juice?
a) 88.00
 The next 5 questions are based on the following data:
An orange juice producer buys all their oranges from one
particular orchard. The amount of juice from the oranges is
approximately normally distributed with a mean of 147.0 ml.
and a standard deviation of 40.0 ml.

Question 5.
What is the probability that eight oranges will provide enough
juice to fill a 1 litre container?

a) 0.3775
b) 0.7580
c) 188.5 ml
d) 88.00%
e) 0.9401