Before we continue let’s introduce a concept a sampling distribution say you have a population of used
cars in a car shop.
We want to analyze the car prices and be able to make some predictions on them.
Population parameters which may be of interest are mean car price standard deviation of prices covariance
and so on normally.
In statistics we would not have data on the whole population but rather just a sample let’s draw a sample
out of that data.
The mean is two thousand six hundred and seventeen dollars and 23 cents.
Now a problem arises from the fact that if I take another sample I may get a completely different mean
three thousand two hundred and one dollars and thirty four cents.
Then a third with a mean of two thousand eight hundred forty four dollars and 33 cents as you can see
the sample mean depends on the incumbents of the sample itself.
So taking a single value as we did in descriptive statistics is definit
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