II WEEK. Lesson - 2-II

Lesson 2: Sampling and
Sampling Distributions
LEARNING GOAL
Define the concept of sampling error
Determine the mean and standard deviation for the sampling
distribution of the sample mean, x
Determine the mean and standard deviation for the sampling
distribution of the sample proportion, p
Describe the Central Limit Theorem and its importance
Apply sampling distributions for both x and p
Describe sampling distributions of sample variances
Copyright 2009 Pearson Education, Inc.
Tools of Business Statistics

Descriptive statistics
Collecting, presenting, and describing data
Inferential statistics
Drawing conclusions and/or making decisions
concerning a population based only on
sample data
Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.
Chap 7-2
Populations and Samples

A Population is the set of all items or individuals
of interest
Examples:
All likely voters in the next election

All parts produced today
All sales receipts for November
A Sample is a subset of the population
Examples:
1000 voters selected at random for interview

A few parts selected for destructive testing
Random receipts selected for audit
Chap 7-3
Simple Random Samples

Every object in the population has an equal chance of
being selected
Objects are selected independently
Samples can be obtained from a table of random
numbers or computer random number generators
A simple random sample is the ideal against which

other sample methods are compared
Chap 7-4
Inferential Statistics
Making statements about a population by
examining sample results
Sample statistics
Population parameters
(known)
Inference
(unknown, but can
be estimated from
sample evidence)
Sample
Population
Chap 7-5
Sampling Error
Sample Statistics are used to estimate
Population Parameters
ex: X is an estimate of the population mean,
Problems:
Different samples provide different estimates of the

population parameter
Sample results have potential variability, thus sampling
error exits
Recall: With a random sample the goal is to gather a
representative group from the population
Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall
7-6
Calculating Sampling Error

Sampling Error:
The difference between a value (a statistic)
computed from a sample and the corresponding
value (a parameter) computed from a population
Example: (for the mean)
Sampling Error x -
where:
x sample mean
population mean
Always present
just because
you sample!
7-7
Review
Population mean:
Population
mean does
NOT vary
See earlier
Sample Mean:
where:
= Population mean
x = sample mean
xi = Values in the population or sample
Sample mean can

vary when
different samples
are collected from
the population
N = Population size
n = sample size
7-8
Example
If the population mean is = 98.6 degrees
and a sample of n = 5 temperatures yields a
sample mean of x = 99.2 degrees, then the
sampling error is
x 99.2 98.6 0.6 degrees
7-9
Sampling Errors
Different samples will yield different sampling
errors
The sampling error may be positive or negative
( x may be greater than or less than )
The size of the error depends on the sample
selected
i.e., a larger sample does not necessarily produce a smaller
error if it is not a representative sample
7-10
Sampling Distribution
A sampling distribution is a distribution

of the probability of possible values
of a statistic for a given size sample
selected from a population
7-11
Chapter Outline
Sampling
Distributions
Sampling
Distribution of
Sample
Mean
Sampling
Distribution of
Sample
Proportion
Sampling
Distribution of
Sample
Variance
Chap 7-12
The Distribution of Sample Means

The distribution of sample means is the
distribution that results when we find the
means of all possible samples of a given size.
The larger the sample size, the more closely
this distribution approximates a normal
distribution.
Slide 8.1- 13
The Distribution of Sample Means

In all cases, the mean of the distribution of
sample means equals the population mean.
If only one sample is available, its sample x
mean, x, is the best estimate for the
population mean, .
Slide 8.1- 14
Developing a
Assume there is a population
Population size N=4
Random variable, X,
is age of individuals
Values of X:
18, 20, 22, 24 (years)
Chap 7-15
Developing a
(continued)
Summary Measures for the Population Distribution:
P(x)
18 20 22 24
21
4
(X )
i
.25
2.236
18
20
22
24
Uniform Distribution
Chap 7-16
Developing a
(continued)
Now consider all possible samples of size n = 2
16 Sample
Means
1st 2nd Observation
Obs 18 20 22 24
18 18 19 20 21
20 19 20 21 22
16 possible samples
(sampling with
replacement)
22 20 21 22 23
24 21 22 23 24
Chap 7-17
Developing a
(continued)
Sampling Distribution of All Sample Means
Sample Means
Distribution
16 Sample Means
1st 2nd Observation
Obs 18 20 22 24
18 18 19 20 21
20 19 20 21 22
22 20 21 22 23
24 21 22 23 24
P(X)
.3
.2
.1
0
18 19
20 21 22 23
(no longer uniform)
24
Chap 7-18
Developing a
(continued)
Summary Measures of this Sampling Distribution:
E(X)
N
18 19 21 24
21
16
2
(
X
)
i
(18 - 21)2 (19 - 21)2 (24 - 21)2

1.58
16
Chap 7-19
Comparing the Population with its

Population
N=4
21
Sample Means Distribution

n=2
X 21
2.236
P(X)
.3
P(X)
.3
.2
.2
.1
.1
X 1.58
18
20
22
24
18 19
20 21 22 23
24
X
Chap 7-20
Expected Value of Sample Mean

Let X1, X2, . . . Xn represent a random sample from a
population
The sample mean value of these observations is
defined as
1 n
X Xi
n i1
Chap 7-21
Standard Error of the Mean

Different samples of the same size from the same
population will yield different sample means
A measure of the variability in the mean from sample to
sample is given by the Standard Error of the Mean:
X
n
Note that the standard error of the mean decreases as
the sample size increases
Chap 7-22
Chap 7-23
Chap 7-24
If the Population is Normal

If a population is normal with mean and
standard deviation , the sampling distribution
of X is also normally distributed with
and
X
n
Chap 7-25
Z-value for Sampling Distribution

of the Mean
Z-value for the sampling distribution of X :
( X ) ( X )
Z
X
n
where:
X = sample mean
= population mean
= population standard deviation

n = sample size
Chap 7-26
Finite Population Correction

Apply the Finite Population Correction if:
a population member cannot be included more
than once in a sample (sampling is without
replacement), and
the sample is large relative to the population
(n is greater than about 5% of N)
Then
2 N n
Var( X)
n N 1
or
X
n
Nn
N 1
Chap 7-27
Finite Population Correction

If the sample size n is not small compared to the
population size N , then use
( X )
Z
Nn
n N 1
Chap 7-28
Sampling Distribution Properties
(i.e.
x is unbiased )
Normal Population
Distribution
Normal Sampling
Distribution
(has the same mean)
Chap 7-29
Sampling Distribution Properties

(continued)
For sampling with replacement:

As n increases,
Larger
sample size
x decreases
Smaller
sample size
x
Chap 7-30
Suppose we roll one die 1,000 times and record the outcome
of each roll, which can be the number 1, 2, 3, 4, 5, or 6.
Figure 5.23 shows a histogram of
outcomes. All six outcomes have
roughly the same relative
frequency, because the die is
equally likely to land in each of the
six possible ways. That is, the
histogram shows a (nearly) uniform
distribution (see Section 4.2).
It turns out that the distribution in
Figure 5.23 has a mean of 3.41 and
a standard deviation of 1.73.
Figure 5.23 Frequency and

relative frequency distribution
of outcomes from rolling one
die 1,000 times.
Slide 5.3- 31
Now suppose we roll two dice 1,000 times and record the mean
of the two numbers that appear on each roll. To find the mean
for a single roll, we add the two numbers and divide by 2.
Figure 5.25a shows a typical result.
The most common values in this
distribution are the central values
3.0, 3.5, and 4.0. These values are
common because they can occur in
several ways.
The mean and standard deviation
for this distribution are 3.43 and
1.21, respectively.
Figure 5.25a Frequency and relative
frequency distribution of sample means
from rolling two dice 1,000 times.
Slide 5.3- 32
Suppose we roll five dice 1,000

times and record the mean of the
five numbers on each roll. A
histogram for this experiment is
shown in Figure 5.25b.
Once again we see that the central
values around 3.5 occur most
frequently, but the spread of the
distribution is narrower than in the
two previous cases.
The mean and standard deviation
are 3.46 and 0.74, respectively.
Figure 5.25b Frequency and

relative frequency distribution
of sample means from rolling
five dice 1,000 times.
Slide 5.3- 33
If we further increase the

number of dice to ten on each
of 1,000 rolls, we find the
histogram in Figure 5.25c,
which is even narrower.
In this case, the mean is 3.49
and standard deviation is 0.56.
Figure 5.25c Frequency and
relative frequency distribution of
sample means from rolling ten
dice 1,000 times.
Slide 5.3- 34
Table 5.2 shows that as the sample size increases, the mean of the
distribution of means approaches the value 3.5 and the standard
deviation becomes smaller (making the distribution narrower).
More important, the distribution looks more and more like a

normal distribution as the sample size increases.
Slide 5.3- 35
If the Population is not Normal

We can apply the Central Limit Theorem:
Even if the population is not normal,
sample means from the population will be
approximately normal as long as the sample size is
large enough.
Properties of the sampling distribution:
and
x
n
Chap 7-36
Central Limit Theorem

As the
sample
size gets
large
enough
the sampling
distribution
becomes
almost normal
regardless of
shape of
population
x
Chap 7-37
If the Population is not Normal

(continued)
Sampling distribution
properties:
Population Distribution
Central Tendency
x
Variation
x
n
(becomes normal as n increases)
Larger
sample
size
Smaller
sample size
x
Chap 7-38
How Large is Large Enough?

For most distributions, n > 25 will give a
sampling distribution that is nearly normal
For normal population distributions, the
sampling distribution of the mean is always
normally distributed
Chap 7-39
Example
Suppose a population has mean = 8 and
standard deviation = 3. Suppose a random
sample of size n = 36 is selected.
What is the probability that the sample mean is
between 7.75 and 8.25?
Chap 7-40
Example
(continued)
Solution:
Even if the population is not normally distributed,
the central limit theorem can be used (n > 25)
so the sampling distribution of
approximately normal
with mean
is
= 8
x
and standard deviation
3
x
0.5
n
36
Chap 7-41
Example
(continued)
Solution (continued):
P(7.75 X
Population
Distribution
???
?
??
?
?
?
?
?
7.75-8
8.25-8
8.25) P
3
3
36
n
36
P(-0.5 Z 0.5) 0.3830

X -
Sampling
Distribution
Standard Normal
Distribution
Sample
.1915
+.1915
Standardize
7.8
X 8
8.2
-0.5
z 0
0.5
Z
Chap 7-42
EXAMPLE Sampling Farms

Texas has roughly 225,000 farms, more than any other state in the
United States. The actual mean farm size is = 582 acres and the
standard deviation is = 150 acres. For random samples of n = 100
farms, find the mean and standard deviation of the distribution of
sample means. What is the probability of selecting a random sample
of 100 farms with a mean greater than 600 acres?
Solution: Because the distribution of sample means is a
normal distribution, its mean should be the same as the mean of
the entire population, which is 582 acres.
The standard deviation of the sampling distribution is
/ n = 150/ 100 = 15.
Slide 8.1- 43
EXAMPLE Sampling Farms

Solution: (cont.)
A sample mean of acres therefore has a standard score of
z=
sample mean pop. mean

600 582
=
= 1.2
standard deviation
15
According to Table 5.1, this standard score is in the 88th

percentile, so the probability of selecting a sample with a mean
less than 600 acres is about 0.88.
Thus, the probability of selecting a sample with a mean greater
than 600 acres is about 0.12.
Slide 8.1- 44
Acceptance Intervals
Goal: determine a range within which sample means are
likely to occur, given a population mean and variance
By the Central Limit Theorem, we know that the distribution of X
is approximately normal if n is large enough, with mean and
standard deviation X
Let z/2 be the z-value that leaves area /2 in the upper tail of the
normal distribution (i.e., the interval - z/2 to z/2 encloses
probability 1 )
Then
z/2 X
is the interval that includes X with probability 1

Chap 7-45
The Distribution of Sample Proportions

The distribution of sample proportions is the
p
distribution that results when we find the
proportions ( ) in all possible samples of a given
size.
The larger the sample size, the more closely this
distribution approximates a normal distribution.
In all cases, the mean of the distribution of
sample proportions equals the population
proportion.
If only one sample is available, its sample
proportion, , is the best estimate for the
population proportion, p.
Slide 8.1- 46
Population Proportions, P
P = the proportion of the population having
some characteristic
Sample proportion (P ) provides an estimate
of P:
X
number of items in the sample having the characteristic of interest
P
n
sample size
0 P 1
P has a binomial distribution, but can be approximated

by a normal distribution when nP(1 P) > 9
Chap 7-47
Sampling Distribution of P
Normal approximation:
P(P )
.3
.2
.1
0
Properties:
E(P ) p
and
.2
.4
.6
1 P
X P(1 P)
Var
n
n
2
P
(where P = population proportion)

Chap 7-48
Z-Value for Proportions

Standardize P to a Z value with the formula:
P P
Z
P P
P(1 P)
n
Chap 7-49
Example
If the true proportion of voters who support
Proposition A is P = .4, what is the probability
that a sample of size 200 yields a sample
proportion between .40 and .45?
i.e.: if P = .4 and n = 200, what is
.45) ?
P(.40 P
Chap 7-50
Example
(continued)
Find P :
Convert to
standard
normal:
if P = .4 and n = 200, what is

.45) ?
P(.40 P
P(1 P)
.4(1 .4)
P
.03464
n
200
.45 .40
.40 .40
P(.40 P .45) P
Z
.03464
.03464
P(0 Z 1.44)
Chap 7-51
Example
(continued)
if p = .4 and n = 200, what is

.45) ?
P(.40 P
Use standard normal table:
P(0 Z 1.44) = .4251

Standardized
Normal Distribution
.4251
Standardize
.40
.45
1.44
Z
Chap 7-52
Sample Variance
Let x1, x2, . . . , xn be a random sample from a
population. The sample variance is
n
1
2
s2
(x
x
)
i
n 1 i1
the square root of the sample variance is called

the sample standard deviation
the sample variance is different for different
random samples from the same population
Chap 7-53
Sampling Distribution of
Sample Variances
The sampling distribution of s2 has mean 2
E(s2 ) 2
If the population distribution is normal, then
If the population distribution 2is normal then
4
2
Var(s 2 )
n 1
(n - 1)s
2
has a 2 distribution with n 1 degrees of freedom

Chap 7-54
The Chi-square Distribution

The chi-square distribution is a family of distributions,
depending on degrees of freedom:
d.f. = n 1
0 4 8 12 16 20 24 28
d.f. = 1
0 4 8 12 16 20 24 28
d.f. = 5
0 4 8 12 16 20 24 28
d.f. = 15
Text Table 7 contains chi-square probabilities

Chap 7-55
Degrees of Freedom (df)

Idea: Number of observations that are free to vary
after sample mean has been calculated
Example: Suppose the mean of 3 numbers is 8.0
Let X1 = 7
Let X2 = 8
What is X3?
If the mean of these three

values is 8.0,
then X3 must be 9
(i.e., X3 is not free to vary)
Here, n = 3, so degrees of freedom = n 1 = 3 1 = 2

(2 values can be any numbers, but the third is not free to vary
for a given mean)
Chap 7-56
Chi-square Example
A commercial freezer must hold a selected
temperature with little variation. Specifications call
for a standard deviation of no more than 4 degrees
(a variance of 16 degrees2).
A sample of 14 freezers is to be
tested
What is the upper limit (K) for the
sample variance such that the
probability of exceeding this limit,
given that the population standard
deviation is 4, is less than 0.05?
Chap 7-57
Finding the Chi-square Value

2
(n
1)s
2
2
Is chi-square distributed with (n 1) = 13

degrees of freedom
Use the the chi-square distribution with area 0.05

in the upper tail:
213 = 22.36 ( = .05 and 14 1 = 13 d.f.)

probability
= .05
2
213 = 22.36
Chap 7-58
Chi-square Example
(continued)
213 = 22.36
So:
( = .05 and 14 1 = 13 d.f.)
(n 1)s 2
2
P(s K) P
13 0.05
16
(n 1)K
22.36
16
or
so
(where n = 14)
(22.36)(16)
27.52
(14 1)
If s2 from the sample of size n = 14 is greater than 27.52, there is

strong evidence to suggest the population variance exceeds 16.
Chap 7-59

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Lesson 2: Sampling and

Tools of Business Statistics

Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.

Populations and Samples

All likely voters in the next election

A Sample is a subset of the population

1000 voters selected at random for interview

Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.

Simple Random Samples

A simple random sample is the ideal against which

Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.

Different samples provide different estimates of the

Calculating Sampling Error

Sample mean can

x 99.2 98.6 0.6 degrees

Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

A sampling distribution is a distribution

Copyright 2011 Pearson Education, Inc. publishing as Prentice Hall

Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.

The Distribution of Sample Means

Copyright 2009 Pearson Education, Inc.

The Distribution of Sample Means

Copyright 2009 Pearson Education, Inc.

Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.

Summary Measures for the Population Distribution:

Now consider all possible samples of size n = 2

Sampling Distribution of All Sample Means

(no longer uniform)

Summary Measures of this Sampling Distribution:

(18 - 21)2 (19 - 21)2 (24 - 21)2

Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.

Comparing the Population with its

Sample Means Distribution

Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.

Expected Value of Sample Mean

Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.

Standard Error of the Mean

Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.

Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.

If the Population is Normal

Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.

Z-value for Sampling Distribution

= population standard deviation

Finite Population Correction

Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.

Finite Population Correction

Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.

Sampling Distribution Properties

Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.

Sampling Distribution Properties

For sampling with replacement:

Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.

Copyright 2009 Pearson Education, Inc.

Figure 5.23 Frequency and

Suppose we roll five dice 1,000

Figure 5.25b Frequency and

Copyright 2009 Pearson Education, Inc.

If we further increase the

Copyright 2009 Pearson Education, Inc.

More important, the distribution looks more and more like a

Copyright 2009 Pearson Education, Inc.

If the Population is not Normal

Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.