ECON 250 Chapter Notes - Chapter 6: Confidence Interval, Null Hypothesis, Standard Scale

• School: Queen's University
• Department: Economics
• Course: ECON 250
• Professor: Jason Rhinelander

Document Summary

By using the 68 95 99. 7 rule, we can assume that 0. 95 of x lies within two standard deviations of x. A confidence interval is calculated using the formula: estimate + margin of error: a confidence level c, gives the probability that the interval will capture the true parameter value in repeated samples. By constructing a 95% confidence interval for the mean of large firms, any normal distribution has probability about 0. 95 of taking a value within + 2 standard deviations of its mean. All normal distributions are the same in the standard scale, so we can obtain everything we need from the standard normal curve: values of z* of c appear in the row labeled z* in table d. Values z* that mark off specified areas are called critical values of the standard normal distribution: it is slightly more precise than the 68 95 99. 7 rule.