In: Statistics and Probability
in the book statistics for managers, 8th edition, question 8.2 constructing a 99% confidence interval estimate for the population mean, the solution on Chegg says that "let the level of significance be a=.01? Where does that number come from and how do they convert that number to 2.576?
We are given 99% confidence interval.
Now we have to find the level of significance that is denoted by
alpha α
Now using this alpha we find the critical value and p-value. So this is a necessary step.
The critical value for two-tailed test
Since it is a two-tailed test so there are two critical value
Using normal z table
Look ate the table for the value 0.005 we see that it lies between 0.07 and 0.08. The critical value is 2.575.
This value is calculated using the excel command =norm.s.inv(0.01/2)=+-2.576
You can use the excel also for finding critical values
For two-tailed test excel command is “=norm.s.inv(alpha/2)”
For left tailed test excel command is “=Norm.s.inv(1-alpha)”
For two tailed test excel command is “=Norm.s.inv(alpha)”
Please do the comment for any doubt or clarification. Thank You!