Inference Sigma Known

Question 1

Confidence Intervals: What

Answer 1

Tell us with a certain level of confidence (e.g. 95%) the true value of μ lies btw the two values of the interval
(formula)

Question 2

Significance Test

Answer 2

Comparing the observed data with a hypothesis whose truth we want to assess
- Use Null Hypothesis: H0
- Use Alternative Hypothesis: H1

Question 3

Testing the Hypothesis

Answer 3

• Compute z statistic and compare with the critical value based on the level of statistical significance
  –> the crit value of standard normal distribution is z*
• If z < z* we accept null
• If z ≥ z* we reject the null

Question 4

Confidence Interval: Compute

Answer 4

1. Find z* from table of z-distribution
2. Compute confidence interval
3. Interpret

Question 5

z-tests: Compute

Answer 5

1. State H0 or H1
2. Calculate value of test statistic
3. Find z*
4. Conclude