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# Chapter 7Confidence Limits and Hypothesis Testing

One of the most important functions of statistics, and the one to which the remainder of this book is devoted, is the determination of whether two variables could be considered to be independent of each other. This is a determination that is made on a sample of observations but is understood to apply to an entire population. The central task of determining independence is the establishment of confidence limits and the testing of hypotheses about the data.

## 7.1 What Is a Confidence Interval?

A confidence interval is the range within which we expect a true population value (e.g., a mean) to lie.

A confidence interval is the range within which we expect a true population value (e.g., a mean) to lie. Confidence intervals are established from samples and are used to predict a population value when it is not possible (e.g., because of high cost or limited time) to measure the true value directly. For example, suppose a hospital financial officer wishes to know the average cost of services provided to the hospital's inpatients. ...

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