A repeated sampling experiment to illustrate “Confidence.” Your task is to estimate the population mean textbook expenditures. You will do both point estimation (what formula?) and interval estimation (what formula?). In creating the confidence interval, you can assume you know the true population standard deviation, σ= $146.64 In this experiment, we actually know both the population mean we are trying to predict and the population standard deviation. The experiment should convince you: •the sample mean is a random variable(we’ll see a distribution of means from the many different samples); •on average, the sample mean will perform well in estimating μ (it’s unbiased); and •some of our confidence intervals will not contain the true mean, but on average, our confidence interval estimates will fall over or contain the true value for about (1-α)100% of our random samples as predicted by the sampling distribution.This makes sense; we construct our intervals based on the variability in the sampling distributin. To estimate the population mean textbook costs you would draw a random sample; we’ve done
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This note was uploaded on 12/08/2011 for the course ECON 211 taught by Professor Daniellass during the Spring '11 term at UMass (Amherst).