Application of confidence intervals and hypothesis testing to a population proportion:

These data are from question 7.43 on page 316 of the textbook (eighth edition), but is very generic application to analyzing data involving a population proportion rather than a mean.
The same tools apply except that the mean of a population is approximated by the proportion of "successes" in the sample data.
the variance is estimated by p*(1-p).
Thus the equivalent of sample distribution SEM is the sqrt((p*(1-p))/n)

In this example, according to the Governor's Council for a drug-free workplace Report (Spring/Summer 1995), a large number of companies in New Jersey were sent a questionnaire about whether employees' performance was affected by the use of alcohol or other drugs.

The results from those who responded are given in the file druguse.txt
Is the observed ratio far enough away from 0 and 1.0 that we can use the normal approximation to the binomial distribution?

Use a 95% confidence interval to estimate the proportion of New Jersey businesses with these substance abuse problems.

solution phatdrug.xls