An economist uses the price of a gallon of milk as a measure of inflation. She finds that the average price is $3.62 per gallon and the population standard deviation is $0.33. You decide to sample 40 convenience stores, collect their prices for a gallon of milk, and compute the mean price for the sample. a. What is the standard error of the mean in this experiment? b. What is the probability that the sample mean is between $3.28 and $3.86? c. What is the probability that the difference between the sample mean and the population mean is less than $0.01?
Inverse Normal Distribution
The method used for finding the corresponding z-critical value in a normal distribution using the known probability is said to be an inverse normal distribution. The inverse normal distribution is a continuous probability distribution with a family of two parameters.
Mean, Median, Mode
It is a descriptive summary of a data set. It can be defined by using some of the measures. The central tendencies do not provide information regarding individual data from the dataset. However, they give a summary of the data set. The central tendency or measure of central tendency is a central or typical value for a probability distribution.
Z-Scores
A z-score is a unit of measurement used in statistics to describe the position of a raw score in terms of its distance from the mean, measured with reference to standard deviation from the mean. Z-scores are useful in statistics because they allow comparison between two scores that belong to different normal distributions.
An economist uses the price of a gallon of milk as a measure of
inflation. She finds that the average price is $3.62 per gallon and the
population standard deviation is $0.33. You decide to sample 40 convenience
stores, collect their prices for a gallon of milk, and compute the
for the sample.
a. What is the standard error of the mean in this experiment?
b. What is the probability that the sample mean is between $3.28
and $3.86?
c. What is the probability that the difference between the sample
mean and the population mean is less than $0.01?
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