How do confidence intervals help us interpret point estimate

Solution

Confidence intervals serve as good estimates of the population parameter because the procedure tends to produce intervals that contain the parameter. Confidence intervals are comprised of the point estimate (the most likely value) and a margin of error around that point estimate. The margin of error indicates the amount of uncertainty that surrounds the sample estimate of the population parameter.

The confidence interval shows the range of sample means that you’d obtain 95% of the time using sample mean as the point estimate of the population mean. Using the graph/curve, it’s easier to understand how a specific confidence interval represents the margin of error, or the amount of uncertainty, around the point estimate.