# week2 - Econ 508 Discussion 4 Feb 2011 Juan Fung 1 Condence...

This preview shows pages 1–2. Sign up to view the full content.

Econ 508: Discussion 4 Feb. 2011 Juan Fung 1 Confidence intervals and hypothesis testing for μ and σ 2 This is a quick review. By now, you should be very comfortable with this. It might be useful to review the important sampling distributions from Econ 506: N, t, χ 2 , and F . If you don’t observe population mean and variance, but do have an IID normal sample, you can easily estimate the mean and variance, and characterize their distributions. This allows you to construct test statistics (or confidence intervals)! The test statistics depend on which parameters you’re testing, and on which you know. 1. Consider a sample of 64 SAT math scores, with sample mean 520 and standard devi- ation 100. Find a 95% confidence interval for the true mean. At the 5% level, would you reject the hypothesis H 0 : μ = 500? Find critical value t . 025 , 63 2 . 30 (why t ?). Then the 95% CI is given by 520 ± 2 . 3( 100 8 ) = 520 ± 32 . 5 = (487 . 5 , 552 . 5) . Since 500 is in the CI, fail to reject H 0 (easily compute the test statistic to verify).

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern