Confidence Intervals

1 Confidence Intervals for Population Mean

Recall from class that we want to construct confidence intervals (CI) for the population mean
(µ) in two situations: when the sample size is large (n ≥ 30) and when the sample size is
small (n < 30).

1.1 CI for Population Mean: Large Sample Size

EX: The U.S. Commerce Dept. is interested in the average house price of all new houses
sold in the U.S. They selected a random sample of 345 homes, and found their average was
$201,400. If we assume the standard deviation of the price of all new homes sold is $38,000,
find a 95% confidence interval for the mean house price of all new homes sold.

In this case, we have a large sample size, so we can use this CI for the mean, as discussed
in class: !
σ
x̄ ± zα/2 √
n
where zα/2 is the value on the standard normal curve with area of α/2 to its right, and n is
our sample size.
So we are 95% confident the mean selling price is between $197,390 and $205,410.
By default, Minitab found a 95% CI for the population mean, so α = 0.05. If we wanted
a 90% CI (or any other confidence level)

1.2 CI for Population Mean: Small Sample Size

EX: The data file pallet.mtw on the course website contains a sample of the weights of
wooden pallets of 2 types of shingles (“Boston” and “Vermont”).
1. Find a 90% CI for the mean weight of the Boston shingles pallets.
2. Find a 95% CI for the mean weight of the Vermont shingles pallets.
3. Evaluate whether the assumption needed for (1) and (2) has been seriously violated.
We’ll go through (1), and you can work on (2) and (3) on your own.

1. To find the 90% CI for a small sample size, we do the following in Minitab:
The first step is to get the data from the course webpage into your Minitab worksheet.
In this case, we have n < 30, so we need to use
!
s
x̄ ± tn−1 √
n
where tn−1 comes from the T-distribution with (n − 1) degrees of freedom (df).

2. Find a 95% CI for the mean weight of the Vermont shingles pallets.
Enter your answer below:
 2 Confidence Interval for Population Proportion
EX: A study of 828 travellers showed that 567 of them purchased plane tickets on an airline
website in the past 12 months. Find a 96% confidence interval for the proportion of all
travellers that have purchased plane tickets on an airline website in the past 12 months.

Here we are looking at a proportion of people that have a certain characteristic. The
formula for a CI for a population proportion p is
s
p̂(1 − p̂)
p̂ ± zα/2
n
where p̂ is the sample proportion.
In this example, our sample size is n = 828 and x = 567, which is the number of people
with the characteristic we are interested in. So our sample proportion is p̂ = 567/828 = 0.685.

The 96% CI for p is (.651, .718).

3 Interpreting a CI for µ
As we discussed in class, the formal interpretation of a confidence interval follows the Big
Pot Theory: if we can draw lots of samples, and create CI’s for each of these samples, we
would expect a certain percentage of them (90%, 99%, or whatever confidence level we’re
using) to contain the true value of µ.
Let’s see if we can get Minitab to illustrate this result numerically.
First, get Minitab to select 100 different samples, each of size n = 40, from a normal
distribution with µ = 10 and σ = 2. (We don’t have to use data from the normal distribution,
though). We do this as follows:
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