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98% confidence interval

Business & Finance
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A clinical trial of n=600 infants using Drug A found that 40% were cured of sepsis. What is the 98% confidence interval for the drug's effectiveness?

Apr 2nd, 2015

a)

sample size, n=600
sample proportion, p = 0.4
we use normal approximation, for this we check that both np and n(1-p) > 5. Since n*p = 240 > 5 and n*(1-p) = 360 > 5, we can take binomial random variable as normally distributed, with mean = p = 0.4 and std deviation = root( p * (1-p) /n ) = 0.02
For constructing Confidence interval,
Margin of Error (ME) = z x SD = 0.0465

98% confidence interval is given by:
Sample Mean +/- (Margin of Error)
0.4 +/- 0.0465 = (0.3535 , 0.4465)

b)

We have n = 600, sample proportion p = 0.4
and P = 0.36
we want to test whether hypothesis:
H0: true P <= 0.36 (null hypothesis)
Ha: true P > 0.36 (alternative hypothesis)

now, calculating statistics,
(test statistic) sigma s = sqrt(P*(1-P)/n) = 0.0196
z-score = (p-P)/s = 2.0408
this is right tailed test, hence p-value = P( z > 2.0408) = 0.0413

this is less than 0.05, so we reject null, and yes this is significantly beter


Apr 2nd, 2015

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Apr 2nd, 2015
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Apr 2nd, 2015
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