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Refer to Fig. 7.6on page 306 .

a. Why are the four graphs in Fig. 7.6(a) all centered at the same place?

b. Why does the spread of the graphs diminish with increasing sample size? How does this result affect the sampling error when you estimate a population mean, μby a sample mean, x~ ?

c. Why are the graphs in Fig. 7.6(a) bell shaped?

d. Why do the graphs in Figs. 7.6(b)and (c) become bell shaped as the sample size increases?

Short Answer

Expert verified

Part (a) All four graphs in Figure Fig$7.6$(a)for various sample sizes are centered at the same locationμ

Part (b) when we try to estimate μusing x¯, we can expect the value of x¯to be from a μnearest point, lowering the sampling error.

Part (c) The sample means (x¯)follow the normal distribution &the curve of a normal distribution.

Part (d) The distribution of x¯'s tends to normalcy as the sample size grows, which is why the graphs become bell-shaped.

Step by step solution

01

Part (a) Step 1: Given information

The figure is

02

Part (a) Step 2: Concept

Formula used:population mean and standard deviation:μx¯=μandσx¯=σ/n.

03

Part (a) Step 3: Explanation

Because the population variable in Fig7.6(a) is regularly distributed, and we know that sample means for normally distributed population variables are always distrusted, μand s.d., σx¯=σn

Thus, regardless of sample size, the mean of the sample means is equal to μAs a result, all four graphs in Figure 7.6(a) for various sample sizes are centered at the same position μ

04

Part (b) Step 1: Explanation

We know that the sample means S.D. equals σn, i.e. it is inversely proportional to the square root of the sample size nAs the sample size increases, the S.D. of the sample mean lowers, and the graph's spread shrinks.

We all know that standard deviation is a measure of dispersion; it tells us how far the observations are spread out or departed from the mean value. As a result, a small s.d. denotes a tiny variation from the mean value, implying that observations are strongly concentrated around the mean value.

We calculate the population mean using the sample mean x¯&; the mean of x¯ is μ, and the standard deviation is σx¯ If σx¯ drops, then At the mean μ, the values of x¯ become more concentrated. As a result, when we try to estimate μ using x¯, we can expect the value of x¯ to be from a μ nearest point, lowering the sampling error.

05

Part (c) Step 1: Explanation

The curve of a normal distribution is bell-shaped because the sample means (x¯)follow the normal distribution.

06

Part (d) Step 1: Explanation

The population variables in fig 7.6(b)&7.6 (c) do not follow a normal distribution. As a result, for small sample sizes, the sample means do not follow a normal distribution. However, for large samples, the distribution of the sample means can be approximated by the normal distribution using CLT.

As a result, the graphs in Figures 7.6(b) and 7.6(c) are not symmetric and bell-shaped for small sample sizes. The distribution of x¯'s tends to normalcy as the sample size grows, which is why the graphs become bell-shaped.

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Most popular questions from this chapter

Loan Amounts. B. Ciochetti et al. studied mortgage loans in the article "A Proportional Hazards Model of Commercial Mortgage Default with Originator Bias" (Joumal of Real Exfate and Economics, Vol, 27. No. 1. pp. 5-23). According to the article, the loan amounts of loans originated by a large insurance-company lender have a mean of \(6.74 million with a standard deviation of \)15.37 million. The variable "loan amount" is known to have a right-skewed distribution.

a. Using units of millions of dollars, determine the sampling distribution of the sample mean for samples of size 200 . Interpret your result.

b. Repeat part (a) for samples of size 600

c. Why can you still answer parts (a) and (b) when the distribution of loan amounts is not normal, but rather right skewed?

d. What is the probability that the sampling error made in estimating the population mean loan amount by the mean loan amount of a simple random sample of 200 loans will be at most $1 million?

e. Repeat part (d) for samples of size 600

7.2 Why should you generally expect some error when estimating a parameter (e.g., a population mean) by a statistic (e.g., a sample mean)? What is this kind of error called?

Why is obtaining the mean and standard deviation of x¯ a first step in approximating the sample distribution of the sample mean by a normal distribution?

According to the central limit theorem, for a relatively large sample size, the variable x~is approximately normally distributed.

a. What rule of thumb is used for deciding whether the sample size is relatively large?

b. Roughly speaking, what property of the distribution of the variable under consideration determines how large the sample size must be for a normal distribution to provide an adequate approximation to the distribution of x~ ?

You have seen that the larger the sample size, the smaller the sampling error tends to be in estimating a population means by a sample mean. This fact is reflected mathematically by the formula for the standard deviation of the sample mean: σi=σ/n. For a fixed sample size, explain what this formula implies about the relationship between the population standard deviation and sampling error.

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