Basic Business Statistics for

12th Edition
Chapter 7
Sampling and Sampling Distributions

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-1

Chap 7-1

Learning Objectives
In this chapter, you learn:

To distinguish between different sampling

methods

The concept of the sampling distribution

To compute probabilities related to the sample

mean and the sample proportion

The importance of the Central Limit Theorem

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-2

Chap 7-2

Why Sample?

DCOVA

Selecting a sample is less time-consuming

& less costly than selecting every item in
the population (census).

An analysis of a sample is less

cumbersome and more practical than an
analysis of the entire population.

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Chap 7-3

Chap 7-3

A Sampling Process Begins With A

Sampling Frame
DCOVA

The sampling frame is a listing of items that

make up the population
Frames are data sources such as population
lists, directories, or maps
Inaccurate or biased results can result if a
frame excludes certain portions of the
population
Using different frames to generate data can
lead to dissimilar conclusions

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-4

Chap 7-4

Types of Samples

DCOVA

Samples

Non-Probability
Samples

Judgment

Convenience

Probability Samples

Simple
Random

Stratified
Cluster

Systematic

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Chap 7-5

Chap 7-5

Types of Samples:
Nonprobability Sample

DCOVA

In a nonprobability sample, items included are

chosen without regard to their probability of
occurrence.

In convenience sampling, items are selected based

only on the fact that they are easy, inexpensive, or
convenient to sample.
In a judgment sample, you get the opinions of preselected experts in the subject matter.

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-6

Chap 7-6

Types of Samples:
Probability Sample

DCOVA

In a probability sample, items in the

sample are chosen on the basis of known
probabilities.
Probability Samples

Simple
Random

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Systematic

Stratified

Cluster

Chap 7-7

Chap 7-7

Probability Sample:
Simple Random Sample

DCOVA

Every individual or item from the frame has an

equal chance of being selected.

Selection may be with replacement (selected

individual is returned to frame for possible
reselection) or without replacement (selected
individual isnt returned to the frame).

Samples obtained from table of random

numbers or computer random number
generators.

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-8

Chap 7-8

Selecting a Simple Random Sample

Using A Random Number Table
DCOVA
Sampling Frame For
Population With 850
Items
Item Name Item #
Bev R.
Ulan X.
.
.
.
.
Joann P.
Paul F.

001
002
.
.
.
.

Portion Of A Random Number Table

49280 88924 35779 00283 81163 07275
11100 02340 12860 74697 96644 89439
09893 23997 20048 49420 88872 08401

The First 5 Items in a simple

random sample
Item # 492
Item # 808
Item # 892 -- does not exist so ignore
Item # 435
Item # 779

849
850

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Item # 002

Chap 7-9

Chap 7-9

Probability Sample:
Systematic Sample

DCOVA

Decide on sample size: n

Divide frame of N individuals into groups of k

individuals: k=N/n

Randomly select one individual from the 1 st

group

Select every kth individual thereafter

N = 40

First Group

n=4
k = 10
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Chap 7-10

Chap 7-10

Probability Sample:
Stratified Sample

DCOVA

Divide population into two or more subgroups (called strata)

according to some common characteristic

A simple random sample is selected from each subgroup, with sample

sizes proportional to strata sizes

Samples from subgroups are combined into one

This is a common technique when sampling population of voters,
stratifying across racial or socio-economic lines.

Population
Divided
into 4
strata

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Chap 7-11

Chap 7-11

Probability Sample
Cluster Sample

DCOVA

Population is divided into several clusters, each representative of

the population

A simple random sample of clusters is selected

All items in the selected clusters can be used, or items can be

chosen from a cluster using another probability sampling technique

A common application of cluster sampling involves election exit polls,

where certain election districts are selected and sampled.

Population
divided into
16 clusters.
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Randomly selected
clusters for sample
Chap 7-12

Chap 7-12

Probability Sample:
Comparing Sampling Methods

DCOVA

Simple random sample and Systematic sample

Simple to use
May not be a good representation of the populations
underlying characteristics
Stratified sample
Ensures representation of individuals across the entire
population
Cluster sample
More cost effective
Less efficient (need larger sample to acquire the same
level of precision)

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-13

Chap 7-13

Evaluating Survey Worthiness

DCOVA

What is the purpose of the survey?

Is the survey based on a probability sample?
Coverage error appropriate frame?
Nonresponse error follow up
Measurement error good questions elicit good
responses
Sampling error always exists

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-14

Chap 7-14

Types of Survey Errors

Coverage error or selection bias

People who do not respond may be different from those who

do respond

Sampling error

Exists if some groups are excluded from the frame and have
no chance of being selected

Nonresponse error or bias

DCOVA

Variation from sample to sample will always exist

Measurement error

Due to weaknesses in question design, respondent error, and

interviewers effects on the respondent (Hawthorne effect)

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-15

Chap 7-15

Types of Survey Errors

DCOVA
(continued)

Coverage error
Non response error
Sampling error
Measurement error

Excluded from
frame
Follow up on
nonresponses
Random
differences from
sample to sample
Bad or leading
question

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-16

Chap 7-16

Sampling Distributions
DCOVA

A sampling distribution is a distribution of all of the

possible values of a sample statistic for a given size
sample selected from a population.

For example, suppose you sample 50 students from your

college regarding their mean GPA. If you obtained many
different samples of 50, you will compute a different
mean for each sample. We are interested in the
distribution of the mean GPA from all possible samples of
50 students.

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-17

Chap 7-17

Developing a
Sampling Distribution

DCOVA

Assume there is a population

Population size N=4

Random variable, X,
is age of individuals

Values of X: 18, 20,

22, 24 (years)

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-18

Chap 7-18

Developing a
Sampling Distribution
(continued)

Summary Measures for the Population Distribution:

P(x)

.3

18 20 22 24

21
4

DCOVA

(X )
i

.2
.1
0

2.236

18

20

22

24

Uniform Distribution
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Chap 7-19

Chap 7-19

Developing a
Sampling Distribution
(continued)

Now consider all possible samples of size n=2

1st
Obs

2nd Observation
18

20

22

24

18

18,18

18,20

18,22

18,24

20

20,18

20,20

20,22

20,24

22

22,18

22,20

22,22

22,24

24

24,18

24,20

24,22

24,24

16 possible samples
(sampling with
replacement)
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DCOVA

16 Sample
Means
1st 2nd Observation
Obs 18 20 22 24

18 18 19 20 21
20 19 20 21 22
22 20 21 22 23
24 21 22 23 24
Chap 7-20

Chap 7-20

Developing a
Sampling Distribution

DCOVA
(continued)

Sampling Distribution of All Sample Means

Sample Means
Distribution

16 Sample Means
_

P(X)
.3
.2
.1
0

18 19

20 21 22 23

(no longer uniform)

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-21

24

Chap 7-21

Developing a
Sampling Distribution

DCOVA
(continued)

Summary Measures of this Sampling Distribution:

18 19 19 24
X
21
16
X

(18 - 21) 2 (19 - 21) 2 (24 - 21) 2

1.58
16

Note:

Here we divide by 16 because there are 16

different samples of size 2.

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-22

Chap 7-22

Comparing the Population Distribution

to the Sample Means Distribution

DCOVA

Population
N=4

21

Sample Means Distribution

n=2

X 21

2.236

P(X)
.3

P(X)
.3

.2

.2

.1

.1

X 1.58

18

20

22

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24

18 19

20 21 22 23

Chap 7-23

24

X
Chap 7-23

Sampling Distribution of The Mean:

Standard Error of the Mean
DCOVA

Different samples of the same size from the same

population will yield different sample means

A measure of the variability in the mean from sample to

sample is given by the Standard Error of the Mean:
(This assumes that sampling is with replacement or
sampling is without replacement from an infinite population)

X
n

Note that the standard error of the mean decreases as

the sample size increases

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-24

Chap 7-24

Sampling Distribution of The Mean:

If the Population is Normal
DCOVA

If a population is normal with mean and

standard deviation , the sampling distribution
of X is also normally distributed with

X and

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X
n

Chap 7-25

Chap 7-25

Z-value for Sampling Distribution

of the Mean

DCOVA

Z-value for the sampling distribution of X :

where:

( X X )
X

( X )

=X
sample mean

= population
mean

= population
standard deviation
n = sample size

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Chap 7-26

Chap 7-26

Sampling Distribution Properties

DCOVA

(i.e.

x is unbiased )

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Normal Population
Distribution

Normal Sampling
Distribution
(has the same mean)

Chap 7-27

Chap 7-27

Sampling Distribution Properties

(continued)

DCOVA
As n increases,

Larger
sample size

decreases

Smaller
sample size

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Chap 7-28

Chap 7-28

Determining An Interval Including A

Fixed Proportion of the Sample Means
DCOVA

Find a symmetrically distributed interval around

that will include 95% of the sample means when
= 368, = 15, and n = 25.

Since the interval contains 95% of the sample means

5% of the sample means will be outside the interval.
Since the interval is symmetric 2.5% will be above
the upper limit and 2.5% will be below the lower limit.
From the standardized normal table, the Z score with
2.5% (0.0250) below it is -1.96 and the Z score with
2.5% (0.0250) above it is 1.96.

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-29

Chap 7-29

Determining An Interval Including A

Fixed Proportion of the Sample Means
(continued)

Calculating the lower limit of the interval

DCOVA

15
XL Z
368 (1.96)
362.12
n
25

Calculating the upper limit of the interval

15
XU Z
368 (1.96)
373.88
n
25
95% of all sample means of sample size 25 are
between 362.12 and 373.88

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-30

Chap 7-30

Sampling Distribution of The Mean:

If the Population is not Normal
DCOVA

We can apply the Central Limit Theorem:

Even if the population is not normal,

sample means from the population will be
approximately normal as long as the sample size is
large enough.

Properties of the sampling distribution:

x
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and

x
n
Chap 7-31

Chap 7-31

Sample Mean Sampling Distribution:

If the Population is not Normal
(continued)

Sampling distribution
properties:

DCOVA

Population Distribution

Central Tendency

x
Variation

x
n

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Sampling Distribution
(becomes normal as n increases)
Larger
sample
size

Smaller
sample size

Chap 7-32

x
Chap 7-32

How Large is Large Enough?

DCOVA

For most distributions, n 30 will give a

sampling distribution that is nearly normal

For fairly symmetric distributions, n 15

For normal population distributions, the

sampling distribution of the mean is always
normally distributed

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-33

Chap 7-33

Example
DCOVA

Suppose a population has mean = 8 and

standard deviation = 3. Suppose a random
sample of size n = 36 is selected.

What is the probability that the sample mean is

between 7.8 and 8.2?

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-34

Chap 7-34

Example
(continued)

DCOVA

Solution:

Even if the population is not normally

distributed, the central limit theorem can be
used (n 30)

so the sampling distribution of

approximately normal

with mean x = 8

and standard deviation x 3 0.5

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

is

36

Chap 7-35

Chap 7-35

Example
(continued)

Solution (continued):

DCOVA

7.8 - 8
X -
8.2 - 8
P(7.8 X 8.2) P

36
n
36

P(-0.4 Z 0.4) 0.6554 - 0.3446 0.3108

Population
Distribution
???
?
??
?
?
?
?
?

Sampling
Distribution

Standard Normal
Distribution

Sample

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Standardize

7.8

X 8

8.2

-0.4

z 0

Chap 7-36

0.4

Z
Chap 7-36

Population Proportions
DCOVA

= the proportion of the population having

a characteristic of interest

Sample proportion (p) provides an estimate

of :

X
number of items in the sample having the characteristic of interest

n
sample size

0 p1

p is approximately distributed as a normal distribution

when n is large
(assuming sampling with replacement from a finite population or
without replacement from an infinite population)

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-37

Chap 7-37

Sampling Distribution of p
DCOVA

Approximated by a
normal distribution if:

n 5

.3
.2
.1
0

and

n(1 ) 5
where

P( ps)

and

Sampling Distribution

.2

.4

.6

(1 )
p
n

(where = population proportion)

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Chap 7-38

Chap 7-38

Z-Value for Proportions

DCOVA

Standardize p to a Z value with the formula:

p
Z

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p
(1 )
n

Chap 7-39

Chap 7-39

Example
DCOVA

If the true proportion of voters who support

Proposition A is = 0.4, what is the probability
that a sample of size 200 yields a sample
proportion between 0.40 and 0.45?

i.e.: if = 0.4 and n = 200, what is

P(0.40 p 0.45) ?

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-40

Chap 7-40

Example
(continued)

if = 0.4 and n = 200, what is

P(0.40 p 0.45) ?

Find p : p

DCOVA

(1 )
0.4(1 0.4)

0.03464
n
200

0.45 0.40
0.40 0.40
Convert to
P(0.40 p 0.45) P
Z

standardized
0.03464
0.03464
normal:
P(0 Z 1.44)

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-41

Chap 7-41

Example
(continued)

if = 0.4 and n = 200, what is

P(0.40 p 0.45) ?

DCOVA

Utilize the cumulative normal table:

P(0 Z 1.44) = 0.9251 0.5000 = 0.4251
Standardized
Normal Distribution

Sampling Distribution

0.4251
Standardize

0.40
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

0.45

1.44
Chap 7-42

Z
Chap 7-42

Chapter Summary

Discussed probability and nonprobability samples

Described four common probability samples
Examined survey worthiness and types of survey
errors
Introduced sampling distributions
Described the sampling distribution of the mean
For normal populations
Using the Central Limit Theorem
Described the sampling distribution of a proportion
Calculated probabilities using sampling distributions

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-43

Chap 7-43

Basic Business Statistics for

12th Edition
Online Topic
Sampling From Finite Populations

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-44

Learning Objectives
In this section, you learn:

To know when finite population corrections are

needed

To know how to utilize finite population

correction factors in calculating standard errors

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-45

Finite Population Correction

Factors
DCOVA

Used to calculate the standard error of both the

sample mean and the sample proportion

Needed when the sample size, n, is more than

5% of the population size N (i.e. n / N > 0.05)

The Finite Population Correction Factor Is:

fpc
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

N n
N 1
Chap 7-46

Using The fpc In Calculating

Standard Errors
DCOVA
Standard Error of the Mean for Finite Populations

X
n

N n
N 1

Standard Error of the Proportion for Finite Populations

(1 ) N n
p
n
N 1
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-47

Using The fpc Reduces The

Standard Error
DCOVA

The fpc is always less than 1

So when it is used it reduces the standard error

Resulting in more precise estimates of

population parameters

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-48

Using fpc With The Mean Example

DCOVA
Suppose a random sample of size 100 is drawn from a
population of size 1,000 with a standard deviation of 40.
Here n=100, N=1,000 and 100/1,000 = 0.10 > 0.05.
So using the fpc for the standard error of the mean we get:

40 1000 100
X
3.8
100 1000 1
Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-49

Section Summary

Identified when a finite population correction

should be used.

Identified how to utilize a finite population

correction factor in calculating the standard
error of both a sample mean and a sample
proportion

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall

Chap 7-50