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CONFIDENCE INTERVALS FOR There is some small probability () that the method of
THE MEAN; KNOWN VARIANCE constructing confidence intervals will fail. We can control this
probability, that is, we can select any value for we want.
Traditionally, is taken to be either 0.05 or 0.01. We refer to
We assume here that the population variance 2 is known. 1 as the confidence level. This is the proportion of the time
This is an unrealistic assumption, but it allows us to give a that the confidence interval contains the parameter, in repeated
simplified presentation which reveals many of the important sampling.
issues, and prepares us to solve the real problem, where 2 is
unknown. (Next handout).
Let z/2 denote the z value such that the area to its right under
We want a confidence interval for the population mean, , the standard normal curve is /2.
based on n observations.
Eg: For = 0.05 we get z/2 = z0.025 = 1.96. So, 95% of the time a normal will be in the range
( 1.96, + 1.96).
b) will be between 1.975 and 1.995 95% of the time. An estimator is a random variable whose value depends on a
sample not yet taken (eg: X ).
c) In 95% of all future samples, x will be between 1.975 and
1.995. An estimate is the value actually taken by the estimator for a
given sample (eg: x = 1985
. ).
d) is between 1.975 and 1.995.
The CI is an interval estimator. It has random endpoints. After
e) None of the above. the sample is taken, its endpoints take on specific values, yielding
an interval estimate.