ISOM2002 STATISTICS AND DATA ANALYSIS

Chapter 8 – Confidence Interval Estimation

 Sampling distribution of the sample means:

If the population If the population distribution is NOT normal or unknown:

distribution is normal:
Sample with any sample Large sample Small sample
size (n  30) (n < 30)
(Any n)
The sampling distribution The sampling distribution of the The sampling
of the sample means is sample means is approximately distribution of the
normal normal sample means is not
Central Limit Theorem normal

σ known σ unknown σ known σ unknown

Confidence interval
Z t Z t cannot be constructed.

 Formula for the 1     100% confidence interval for estimating  when  is known:

± ⋅ = ± ⋅ where =
√ √

 Formula for the 1     100% confidence interval for estimating  when  is unknown:
± ⋅ = ± ⋅ where ≈ with df  n  1
√ √

 If  is unknown, the conditions for normal approximation of sampling distribution of the

sample proportions are:
1. n  p  5 , and
2. n  1  p   5 .
 If the preceding two conditions are met, formula for the 1     100% confidence interval
for estimating  :
( ) ( )
± ⋅ = ± ⋅ where ≈

 Determining the sample size in interval estimation:

∙
=
∙ ∙( )
=

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Example 1
A sample of 49 observations is taken from a population for which the standard deviation is 10.
The sample mean is 55.

a. Determine the 95% confidence interval for the population mean.

∵ The population distribution is unknown but n =
∴ The sampling distribution of is approximately normal

Interpretation: We are 95% confident that the population mean is between 52.2 and 57.8

b. Determine the 99% confidence interval for the population mean.

Example 2
A recent survey of 25 CEOs who were laid off from their previous position revealed it took a mean
of 26 weeks for them to find another position. Construct a 90% confidence interval for the
population mean time to find another position. The historical population standard deviation was
found to be 6.2 weeks from a recent report and the population distribution is known to be normal.
∵ The population distribution is normal
∴ The sampling distribution of is normal

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Example 3
A recent study by the American Automobile Dealers Association revealed the mean amount of
profit per car sold for a sample of 20 dealers was $290, with a sample standard deviation of $125.
a. What assumption is needed to construct a confidence interval?
Since n = 20 < 30, we have to assume the population distribution is normal.

(Reason: to avoid the situation in which the population distribution is not normal and n < 30,
the confidence interval cannot be constructed because the sampling distribution of sample
means is not normal)

b. What is the 95% interval estimate of the population mean amount of profit?
∵ The population distribution is assumed to be normal
∴ The sampling distribution of is normal

Example 4
An auditor is faced with a normally distributed population of 10,000 vouchers. A random sample
of 100 vouchers is selected revealed a mean voucher amount of $1,076.39 and standard
deviation of $273.62.
a. Construct a 99% confidence interval estimate of the mean voucher amount?
∵ The population distribution is
∴ The sampling distribution of is normal / approximately normal.

b. Construct a 99% confidence interval estimate of the total amount for the population of
vouchers?

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Example 5
The manager of a TV station must determine what percentage of household in the city have more
than one TV set. A random sample of 500 households taken from 20,000 households reveals that
275 have two or more sets.
a. Is the sampling distribution of sample proportions approximately normal?
∵ 1.

2.

∴ The sampling distribution of p is approximately normal.

b. What is the 90 percent confidence interval for the proportion of all homes with two or more
sets?

c. Estimate the number of households have two or more sets, using a 90% confidence level.

Example 6
A student in public administration wants to determine the mean amount members of city
councils earn. The sampling error / margin of error in estimating the mean is to be less than ±
$100 with a 95 percent level of confidence. The student found a report by the Department of
Labor that estimated the standard deviation to be $1,000. What is the required sample size?

Example 7
A marketing director would like to estimate the population mean to be within ± 5 seconds of the
true value and desires to be 95% confident of correctly estimating the true mean. Based on
studies taken in the last year, the sample standard deviation is 20 seconds. What is the minimum
required sample size?

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Example 8
a. Country A is planning a law prohibiting smoking in all public buildings. One organization in
country A wants to estimate the proportion of country A’s residents who support such an
ordinance. In this survey, the sampling error / margin of error is restricted not to exceed ± 2
percent and a 95 percent confidence level is being set. How many residents should be
included in the sample?

b. A similar survey done in country B last year shown that the proportion of country B’s
residents who support such an ordinance is 0.3. Regarding to the preceding example, how
many country A’s residents should be included in the sample?

Example 9
The following table lists some of the nation-wide public opinion polls that were conducted
relating to the 2020 United States presidential election between Democratic candidate Joe Biden,
Republican Donald Trump.

Regarding the poll conducted by CNN, is the sample size of 1001 large enough?

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 ISOM2002 STATISTICS AND DATA ANALYSIS

Example 10

TVBS 民調中心
2020 年選舉民意調查 (29/12/2019 發佈)
(樣本數:1030, 抽樣誤差: ± 3.0%, 信心水準: 95%)

Why TVBS used a larger sample size (1030) for this poll than CNN used for the poll of 2020 U.S.
presidential election?

 pg. 315: Qs. 8.8 and 8.10

 pg. 321: Qs. 8.16, 8.18, 8.20, and 8.24
 pg. 325: Qs. 8.28, 8.30, and 8.32
 pg. 330: Qs. 8.38, 8.40, 8.42, and 8.46

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