Respond To At Least 2 Other Students' Responses

Respond To At Least 2 Other Students Responses

Instructions: You must respond to at least 2 other students. Responses may include direct questions. In your first peer posts, pick another confidence level, i.e., 90%, 99%, 97%, or any other. Have fun and be creative with it and calculate another T-confidence interval and interpret your results. Compare your results to that of the initial 95%, how much do they differ? How useful can this type of information be when you go to buy a new car or even a house? In your second peer post, pick another confidence level, i.e., 90%, 99%, 97%, or any other. Have fun and be creative with it and calculate another proportion interval and interpret your results. Compare your results to that of the initial 95%, how much do they differ? How useful can this type of information be when you go to buy a new car or even a house? Make sure you include your data set in your initial post as well.

Paper For Above instruction

The assignment involves calculating and interpreting confidence intervals for a dataset, focusing on comparing results at different confidence levels. The initial data set includes key statistics such as the mean, standard deviation, and sample size, which serve as the basis for the calculations. The objective is to understand how varying the confidence level impacts the range of estimates and the potential utility of such information in real-life decisions like purchasing a car or a house.

Initially, we examine the 95% confidence interval for the mean price of a sample of cars. Using the given data (mean = $25,014; standard deviation = $88.47; sample size = 10), the t-critical value for 9 degrees of freedom (DF) is approximately 2.262. The standard error (SE) is calculated as the standard deviation divided by the square root of the sample size, resulting in approximately $27.97. To find the margin of error (ME), multiply the t-critical value by the SE: 2.262 * 27.97 ≈ $63.3. Therefore, the confidence interval for the mean car price at 95% confidence is approximately $25,014 ± $63.3, i.e., from about $24,950.7 to $25,077.3. This narrow interval suggests high precision in estimating the average car price, implying that with 95% confidence, the true mean falls within this range.

When calculating a 90% confidence interval, the t-critical value for 9 degrees of freedom decreases to approximately 1.833. Recalculating the margin of error: 1.833 * 27.97 ≈ $51.2. The 90% confidence interval then becomes approximately $25,014 ± $51.2, ranging from about $24,962.8 to $25,065.2. The narrower interval reflects less confidence but offers a tighter estimate of the mean. Comparing this to the 95% interval, the difference is roughly $12, which may not seem substantial but signifies a trade-off between confidence and precision.

These intervals have practical implications. For example, when buying a car or house, understanding the range of average prices with different confidence levels can guide negotiations and expectations. Having a narrow confidence interval at a high confidence level, such as 95%, provides assurance of the estimate's reliability. Conversely, choosing a lower confidence level yields a narrower interval but less certainty, which may be advantageous in time-sensitive decisions where some uncertainty is acceptable.

Similarly, for proportions, the initial dataset indicates that 4 out of 10 cars (40%) are below the average price, leading to an estimated proportion of 0.4. Calculating a 95% confidence interval involves determining the standard error for proportion: SE = √(p(1-p)/n) = √(0.40.6/10) ≈ 0.1549. Using a z-critical value for 95% confidence (1.96), the margin of error is 1.96 0.1549 ≈ 0.3036. The resulting interval for the true proportion of cars below the average price is approximately 0.4 ± 0.3036, ranging from about 0.0964 to 0.7036. This broad interval indicates considerable uncertainty, reflecting the small sample size.

Calculating a 90% confidence interval, the z-critical value reduces to approximately 1.645. The margin of error then becomes 1.645 * 0.1549 ≈ 0.2548, narrowing the range to about 0.4 ± 0.2548, from roughly 0.1452 to 0.6548. The narrower interval at the lower confidence level offers a tighter estimate, but with less certainty about capturing the true proportion.

The practical value of these confidence intervals extends into various purchasing decisions. For instance, knowing the estimated range of average car prices helps buyers gauge fair market values and negotiate better deals. Similarly, understanding the proportion of vehicles below a certain price point informs consumers about market affordability. When considering purchasing a house, similar confidence intervals can help estimate expected property costs and market trends, aiding informed decision-making.

Calculating these confidence intervals highlights the importance of sample size and confidence level choices. Larger samples tend to produce narrower intervals, increasing the precision of estimates. While higher confidence levels provide greater assurance that the interval contains the true parameter, they also result in wider ranges. Weighing these factors is crucial in real-world applications, especially when financial decisions are involved.

References

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