Question

Respond to the following in a minimum of 175 words:

The mean yearly income for construction works in New York has been calculated as $78,000, with incomes as low as $75,000 and as high as $80,000. If a confidence interval of 90% has been calculated with respect to this range and mean, what does that confidence interval tell us? In your opinion, is a confidence interval of 90% useful? Why or why not? What would be the significance of a confidence interval of 50% or less?

Answer 1

Confidence level tells us the long term capture rate of these interval over repeated samples. 90% Confidence interval will tell us that if we sample repeatedly, 90% of the intervals we obtain should contain the true value of µ. We are 90% certain that the calculated interval captured true underlying mean yearly income for construction work in New York.

90% Confidence interval is useful but less useful than 95% confidence interval as We are 95% certain that the calculated interval captured true underlying mean yearly income for construction work in New York.

Significance of a confidence interval of 50% or less is very less.