Step 1Give a real-world example and post. Give several examples of when confiden

Question

Step 1Give a real-world example and post. Give several examples of when confidence intervals are used in the real world. Be sure to include the confidence interval that would need to be calculated (95%, 80%, etc.) and explain why certain situations call for different intervals. Step 2Read and respond to other students' posts. Read other students' posts and respond to at least two of them. Use your personal experience, if it's relevant, to support or debate other students' posts. If differences of opinion occur, debate the issues professionally and provide examples to support opinions.

Explanation / Answer

In statistics, a confidence interval gives the percentage probability that an estimated range of possible values in fact includes the actual value being estimated.
The confidence interval is used in the real world in the various fields. Some of them are as follows:
1.Risk Management: Because it is impossible to predict a future event with 100 percent accuracy, confidence intervals are used by businesses to manage risk. By understanding how likely a given risk is to occur, the business can manage the risks of a non-occurrence accordingly.

2. Market Research: One effect of confidence intervals in businesses is in determining the reliability of market research. By collecting data from customers, past sales numbers and other sources, a company can statistically estimate the value of future sales. By using a confidence interval, the company can determine the range its sales are likely to fall.

3. Budget Forecasting: When a business forecasts a budget for a fiscal period, it will need to estimate both revenues and costs. Here also a confidence interval will help for determining the range of costs or revenues.

Also there are numerous other examples where we confidence interval is quite helpful.
There are three factors that determine the size of the confidence interval for a given confidence level:
• Sample size
• Percentage
• Population size

When sample size is large you will be more confident. So, in this case a lower confidence level can be used whereas in case of small samples 95% or higher confidence interval should be used.

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