Statistics for Business: Decision Making and Analysis, 3rd Edition

Chapter Summary

Confidence intervals provide a range for a parameter. The coverage (or confidence level) of a confidence interval is the probability of getting a sample in which the interval includes the parameter. Most often, confidence intervals have coverage equal to 0.95 and are known as 95% confidence intervals. The margin of error is the half-length of the 95% confidence interval. A z-interval uses percentiles from a normal distribution, whereas a t-interval uses (slightly larger) percentiles from a Student’s t-distribution. Use a z-interval for proportions even with an estimated standard error; use a t-interval for the mean when the standard deviation is estimated from the data.

Key Terms

• confidence interval, 363

  • for μ, 370

  • for p,