Chapter 7 we showed that the value of the sample mean x̄ provides a point estimate of the population mean μ and that the value of the sample proportion p provides a point estimate of the population proportion p. Since some degree of error due to sampling is anticipated, we cannot expect the value of a point estimate to be exactly equal to the corresponding population parameter.
Point estimates of population parameters do not provide information about the precision, or magnitude of the sampling error, present in the estimation process. Interval estimates of population parameters have an advantage over point estimates in that interval estimates provide the desired precision information. Often the precision information is essential in evaluating and interpreting the sample results. For example, assume that a sample is used to estimate the mean annual starting salary for recent college graduates with degrees in business administration. Suppose the sample mean for this study is