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ST 260
Margin of Error
P41
1
Department of ISM, University of Alabama, 2006
1
Chapter 7
Confidence Intervals and
Sample Size
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Margin of Error
P41
2
Department of ISM, University of Alabama, 2006
7
General form for “margin of error”
when
σ
is known:
m.o.e. =
Z
c
σ
n
α
2
Z
α
2
appropriate percentile from the
standard normal distribution,
i.e., the Z table.
where
is the
8
Explanation of symbol:
Z ~ N(0,1)
α
/2
0
Z
α
/2
Z
α
/2
cuts off the top tail at area =
α
/2
.5
α
/2
ST 260
Margin of Error
P41
3
Department of ISM, University of Alabama, 2006
9
Amount of
confidence
Half the
Value
Table value
.95
.90
.80
.98
Z
α
/ 2
Examples
10
11
12
.95 confidence
α
= .05 risk
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Margin of Error
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Department of ISM, University of Alabama, 2006
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Example 1.
Lottery Tickets (Example 71 pg. 348)
A researcher wishes to estimate the average amount of
money a person spends on lottery tickets each month. A
sample of 50 people who play the lottery found
the mean to be $19 and the standard deviation to be 6.8.
Find the best point estimate of the population mean and the
95% confidence interval of the population mean.
The best point estimate of the population
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This note was uploaded on 04/20/2008 for the course BER 345 taught by Professor Moore during the Spring '08 term at Alabama.
 Spring '08
 Moore

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