Chapter 7 Lecture Examples

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Confidence Intervals for 𝜇 ("when" 𝜎^2 "

known ")
While there is no direct function in Excel to compute the confidence interval, there is a
function to compute the value of the error (𝑧_(1−𝛼/2) 𝜎/√𝑛) substracted from and a
sample mean 𝑥 ̅.
The error of a (1−𝛼)100% confidence interval for µ (𝜎^2 known) can be obtained using the fol
Excel function:= CONFIDENCE.NORM(𝜶; 𝜎; 𝒏)

Woolworths analysed the value of purchases made on credit cards by a random sample
credit card customers, the mean was found to be R170. It is known that the standard de
credit card purchases is R22.
1) Construct a 95% confidence for the mean value of credit card purchases by all their
customers.

=CONFIDENCE.NORM(0.05; 22; 25)


The Error E =
Lower Limit = =170-CONFIDENCE.NORM(0.05; 22; 25)

Upper Limit =
=170+CONFIDENCE.NORM(0.05; 22; 25)

2) Construct a 99% confidence for the mean value of credit card purchases by all their
customers.

=CONFIDENCE.NORM(0.01; 22; 25)


The Error E =
=170-CONFIDENCE.NORM(0.01; 22; 25)
Lower Limit =
Upper Limit =
=170+CONFIDENCE.NORM(0.01; 22; 25)
^2 "

interval, there is an Excel L =𝒙 ̅− Error


racted from and added to the U =𝒙 ̅+ Error

tained using the following


𝒏)

a random sample of 25 of their


n= 25
at the standard deviation of all 𝑥 ̅= 170
𝜎= 22
α= 0.05
hases by all their credit card

22; 25)

n= 25
hases by all their credit card 𝑥 ̅= 170
𝜎= 22
α= 0.01

22; 25)
Confidence Intervals for 𝜇 ("when" 𝜎^2 "
unknown ")
There is no direct function in Excel to compute the confidence interval, however th
Excel function to compute the value of the error (𝑡_(𝑛−1; 1−𝛼/2) 𝑆/√𝑛) that can then b
substracted from and added to the sample mean 𝑥 ̅.

1) A survey of a random sample of 18 grocery shoppers in Kimberley found that the


grocery purchases was R78 with a standard deviation of R21. Find a 98% confidenc
average value of a grocery purchase by all grocery shoppers in Kimberley.
=CONFIDENCE.T(0.02; 21; 18)
The Error E =
=78 - CONFIDENCE.T(0.02; 21; 18)
Lower Limit =
Upper Limit = =78 + CONFIDENCE.T(0.02; 21; 18)

2) From a random sample of 100 Cape Town car commuters, the mean time to comm
was found to be 35.8 minutes with a variance of 95. Construct a 90% confidence int
time taken by all car commuters in Cape Town to travel to work daily.

=CONFIDENCE.NORM(0.1; SQRT(95); 100)


The Error E =
Lower Limit = = 35.8 - CONFIDENCE.NORM(0.1; SQRT(95); 100)
= 35.8 - CONFIDENCE.NORM(0.1; SQRT(95); 100)

Upper Limit = = 35.8 + CONFIDENCE.NORM(0.1; SQRT(95); 100)


n" 𝜎^2 "
ce interval, however there is an L =𝒙 ̅− Error
/2) 𝑆/√𝑛) that can then be U =𝒙 ̅+
Error

n= 18
imberley found that the mean value of their 𝑥 ̅= 78
. Find a 98% confidence interval for the s = 21
in Kimberley. 𝜶= 0.02

n= 100
, the mean time to commute to work daily 𝑥 ̅= 35.8
ct a 90% confidence interval for the mean 𝒔^𝟐= 95
𝜶= 0.1
ork daily.

RT(95); 100)
RT(95); 100)

RT(95); 100)

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