A random sample of 100 teletype operators indicates that their salaries fluctuate quite a bit. The sample Standard deviation of their daily salaries is $10.00. Construct a 90 percent confidence interval on the population standard deviation of the daily salaries.

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Answer:

[tex]\frac{(99)(10)^2}{123.225} \leq \sigma^2 \leq \frac{(99)(10)^2}{77.046}[/tex]

[tex] 80.341 \leq \sigma^2 \leq 128.495[/tex]

Now we just take square root on both sides of the interval and we got:

[tex] 8.963 \leq \sigma \leq 11.336[/tex]

Step-by-step explanation:

Data given and notation

s=10 represent the sample standard deviation

[tex]\bar x[/tex] represent the sample mean

n=100 the sample size

Confidence=90% or 0.90

A confidence interval is "a range of values that’s likely to include a population value with a certain degree of confidence. It is often expressed a % whereby a population mean or variance lies between an upper and lower interval".  

The margin of error is the range of values below and above the sample statistic in a confidence interval.

The Chi Square distribution is the distribution of the sum of squared standard normal deviates .

Calculating the confidence interval

The confidence interval for the population variance is given by the following formula:

[tex]\frac{(n-1)s^2}{\chi^2_{\alpha/2}} \leq \sigma^2 \leq \frac{(n-1)s^2}{\chi^2_{1-\alpha/2}}[/tex]

The next step would be calculate the critical values. First we need to calculate the degrees of freedom given by:

[tex]df=n-1=100-1=99[/tex]

Since the Confidence is 0.90 or 90%, the value of [tex]\alpha=0.1[/tex] and [tex]\alpha/2 =0.05[/tex], and we can use excel, a calculator or a table to find the critical values.  

The excel commands would be: "=CHISQ.INV(0.05,99)" "=CHISQ.INV(0.95,99)". so for this case the critical values are:

[tex]\chi^2_{\alpha/2}=123.225[/tex]

[tex]\chi^2_{1- \alpha/2}=77.046[/tex]

And replacing into the formula for the interval we got:

[tex]\frac{(99)(10)^2}{123.225} \leq \sigma^2 \leq \frac{(99)(10)^2}{77.046}[/tex]

[tex] 80.341 \leq \sigma^2 \leq 128.495[/tex]

Now we just take square root on both sides of the interval and we got:

[tex] 8.963 \leq \sigma \leq 11.336[/tex]