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Suppose we have a binomial experiment in which success is defined to be a particular quality or attribute that interests us. (a) Suppose \(n=100\) and \(p=0.23 .\) Can we safely approximate the \(\hat{p}\) distribution by a normal distribution? Why? Compute \(\mu_{\hat{p}}\) and \(\sigma_{\hat{p}}\). (b) Suppose \(n=20\) and \(p=0.23 .\) Can we safely approximate the \(\hat{p}\) distribution by a normal distribution? Why or why not?

Short Answer

Expert verified
(a) Yes, normal approximation is appropriate; \(\mu_{\hat{p}} = 0.23\), \(\sigma_{\hat{p}} \approx 0.0428\). (b) No, normal approximation is not appropriate.

Step by step solution

01

Understand Requirements

We need to check whether the sampling distribution of the proportion \(\hat{p}\) in a binomial experiment can be approximated by a normal distribution, given two different scenarios: \(n=100\) and \(p=0.23\); \(n=20\) and \(p=0.23\).
02

Check Normal Approximation Conditions for (a)

For the normal approximation to be suitable, both \(np\) and \(n(1-p)\) must be at least 5. For \(n=100\) and \(p=0.23\), calculate: \(np = 100 \times 0.23 = 23\) and \(n(1-p) = 100 \times 0.77 = 77\). Both are greater than 5, so the normal approximation is appropriate.
03

Compute Mean and Standard Deviation for (a)

The mean of the sampling distribution of \(\hat{p}\) is \(\mu_{\hat{p}} = p = 0.23\). The standard deviation is \(\sigma_{\hat{p}} = \sqrt{\frac{p(1-p)}{n}} = \sqrt{\frac{0.23 \times 0.77}{100}} \approx 0.0428\).
04

Check Normal Approximation Conditions for (b)

For \(n=20\) and \(p=0.23\), calculate: \(np = 20 \times 0.23 = 4.6\) and \(n(1-p) = 20 \times 0.77 = 15.4\). Since \(np < 5\), the normal approximation is not appropriate for \(n=20, p=0.23\).

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Key Concepts

These are the key concepts you need to understand to accurately answer the question.

Normal Approximation
In statistics, when dealing with a binomial distribution, certain conditions allow us to apply a normal approximation, simplifying analysis and calculations. The normal approximation hinges on the Central Limit Theorem, which suggests that as the sample size grows, the sampling distribution of the sample mean will approximate a normal distribution, even if the original data follows a non-normal distribution.

To determine if a binomial distribution can assume this normal approximation, the rule of thumb is applied: both the expected number of successes, denoted by \(np\), and the expected number of failures, \(n(1-p)\), should be at least 5. This ensures that there are enough occurrences for the symmetry and bell shape of the normal distribution to emerge. In practical terms:
  • If the conditions \(np \geq 5\) and \(n(1-p) \geq 5\) hold true, then the binomial distribution can be approximated as a normal distribution.
  • If not, the approximation won’t be reliable, and other methods should be considered.
In our example, for \(n=100\) and \(p=0.23\), calculations satisfy these conditions. But for \(n=20\), the conditions are not met, making the normal approximation unsuitable.
Sampling Distribution
A sampling distribution refers to the probability distribution of a statistic (like the sample proportion \(\hat{p}\)) obtained from all possible samples of a specific size from a population. It's crucial because it provides insight into the variability of the statistic.

For a binomial experiment, the sampling distribution of the sample proportion \(\hat{p}\) is key, especially in making inferences about population parameters. When the sample size is sufficiently large and the normal approximation conditions are met, \(\hat{p}\) follows approximately a normal distribution.

Understanding this distribution gives useful properties:
  • It helps in estimating the population proportion \(p\).
  • It offers information on the typical variation you might expect from sample to sample.
In scenarios where the normal approximation is valid (like our \(n=100\)), the sampling distribution of \(\hat{p\) simplifies further analysis using the properties of the normal distribution.
Mean and Standard Deviation
Calculating the mean and standard deviation of a sampling distribution is intrinsic to grasping the binomial setup and its normal approximation.

The mean of the sampling distribution of \(\hat{p}\) is symbolized by \(\mu_{\hat{p}}\). For a binomial distribution, it equals the probability of success \(p\). Hence, \(\mu_{\hat{p}} = p = 0.23\) in our first example with \(n=100\).

Standard deviation measures the spread or variability of a distribution. For the sampling distribution of \(\hat{p}\), it's represented as:\[\sigma_{\hat{p}} = \sqrt{\frac{p(1-p)}{n}}\]This equation captures how dispersed the sample proportions might be around the mean \(p\). For instance, with \(n=100\) and \(p=0.23\), the standard deviation approximates 0.0428, indicating the typical deviation of sample proportions from the true population proportion.
Normal Distribution Conditions
To utilize normal distribution for approximating binomial distributions, one must satisfy specific conditions. These are often rooted in the need for a sufficiently large sample size, ensuring that the distribution resembles the symmetrical, bell-shaped curve of the normal distribution.

Here are the key conditions ensuring a reliable normal approximation:
  • The sample size \(n\) must be large enough so that both \(np\) and \(n(1-p)\) exceed or equal 5.
  • The probability of success \(p\), usually lies between 0 and 1; extreme probabilities close to these limits can hinder normality.
Applying these principles, for \(n=100\) with \(p=0.23\), both conditions are successfully met, justifying the normal approximation. However, with a smaller sample size like \(n=20\), at the same probability, the distribution doesn't meet these criteria, forcing statisticians to look for alternative methods for analysis.

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Most popular questions from this chapter

Assume that \(x\) has a normal distribution with the specified mean and standard deviation. Find the indicated probabilities. $$ P(x \geq 90) ; \mu=100 ; \sigma=15 $$

Assume that \(x\) has a normal distribution with the specified mean and standard deviation. Find the indicated probabilities. $$ P(10 \leq x \leq 26) ; \mu=15 ; \sigma=4 $$

Find the \(z\) value described and sketch the area described. Find \(z\) such that \(97.5 \%\) of the standard normal curve lies to the left of \(z\)

Let \(z\) be a random variable with a standard normal distribution. Find the indicated probability, and shade the corresponding area under the standard normal curve. $$ P(z \geq-1.50) $$

Templeton World is a mutual fund that invests in both U.S. and foreign markets. Let \(x\) be a random variable that represents the monthly percentage return for the Templeton World fund. Based on information from the Morningstar Guide to Mutual Funds (available in most libraries), \(x\) has mean \(\mu=1.6 \%\) and standard deviation \(\sigma=0.9 \%\). (a) Templeton World fund has over 250 stocks that combine together to give the overall monthly percentage return \(x\). We can consider the monthly return of the stocks in the fund to be a sample from the population of monthly returns of all world stocks. Then we see that the overall monthly return \(x\) for Templeton World fund is itself an average return computed using all 250 stocks in the fund. Why would this indicate that \(x\) has an approximately normal distribution? Explain. Hint: See the discussion after Theorem \(7.2\). (b) After 6 months, what is the probability that the average monthly percentage return \(\bar{x}\) will be between \(1 \%\) and \(2 \%\) ? Hint: See Theorem \(7.1\), and assume that \(x\) has a normal distribution as based on part (a). (c) After 2 years, what is the probability that \(\bar{x}\) will be between \(1 \%\) and \(2 \%\) ? (d) Compare your answers to parts (b) and (c). Did the probability increase as \(n\) (number of months) increased? Why would this happen? (e) If after 2 years the average monthly percentage return \(\bar{x}\) was less than \(1 \%\), would that tend to shake your confidence in the statement that \(\mu=1.6 \%\) ? Might you suspect that \(\mu\) has slipped below \(1.6 \%\) ? Explain.

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