Chapter 8 - Interval Estimation

t-Distribution

A family of probability distributions that can be used to develop an interval estimate of a population mean whenever the population standard deviation is unknown and is estimated by the sample standard deviation

Margin of Error

The +/- value added to and subtracted from a point estimate in order to develop an interval estimate of a population parameter.

Degrees of Freedom

A parameter of the t distribution. When the t distribution is used in the computation of an interval estimate of a population mean, the appropriate t distribution has n-1 degrees of freedom, where n is the size of the sample.

Interval Estimate

An estimate of a population parameter that provides an interval believed to contain the value of the parameter. Form: point estimate +/- margin of error.

Confidence Interval

Another name for an interval estimate.

Population Standard Deviation Known

The case when historical data or other information provide a good value for the population standard deviation prior to taking a sample. The interval estimation procedure uses this known value in computing the margin of error.

Confidence Level

The confidence associated with an interval estimate. For example, if an interval estimation procedure provides intervals such that 95% of the intervals formed using the procedure will include the population parameter, the interval estimate is said to be constructed at the 95% confidence level.

Confidence Coefficient

The confidence level expressed as a decimal value. For example, .95 is the confidence coefficient for a 95% confidence level.

Population Standard Deviation Unknown

The more common case when no good basis exists for estimating the population standard deviation prior to taking the sample. The interval estimation procedure uses the sample standard deviation in computing the margin of error.

Level of Significance

The probability that the interval estimation procedure will generate an interval that does not contain the population mean.