This is a two-proportion z-test setup and I knew that pretty quickly, but I fumbled the confidence interval formula under pressure.
Start by clarifying that this is a two-proportion z-test comparing independent binomial samples. Compute the sample proportions, pooled proportion, standard error, z-statistic, and p-value, then construct a 95% confidence interval for the difference. Finally, discuss how the unequal sample sizes affect power and precision, and mention practical significance.
Pro tip: Emphasize that with large samples, even tiny differences can be statistically significant, so always interpret the effect size and confidence interval in the context of business impact. Also, note that the unequal sample sizes mean the smaller sample (Coin A) contributes more uncertainty to the difference.
Define null hypothesis H0: p_A = p_B and alternative H1: p_A ≠ p_B. Check assumptions: independent flips, binary outcomes, and large-sample condition (np and n(1-p) ≥ 10 for both).
Calculate p̂_A = 40/100 = 0.40, p̂_B = 600/1000 = 0.60. Pooled proportion p̂ = (40+600)/(100+1000) = 640/1100 ≈ 0.5818. Standard error SE = sqrt(p̂(1-p̂)(1/100 + 1/1000)) ≈ sqrt(0.5818*0.4182*0.011) ≈ 0.0517. z = (0.40 - 0.60)/0.0517 ≈ -3.87.
For a two-sided test, p-value = 2 * P(Z < -3.87) ≈ 0.0001. Since p < 0.05, reject H0 and conclude the proportions are statistically different.
Use unpooled SE for CI: SE_diff = sqrt(p̂_A(1-p̂_A)/100 + p̂_B(1-p̂_B)/1000) = sqrt(0.24/100 + 0.24/1000) = sqrt(0.0024 + 0.00024) = sqrt(0.00264) ≈ 0.0514. 95% CI: (0.40-0.60) ± 1.96*0.0514 = (-0.20 ± 0.1007) = (-0.3007, -0.0993).
Note that unequal sample sizes affect power and precision; the smaller sample (Coin A) has larger variance. Also, statistical significance does not imply practical significance—consider effect size and business context.
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