2. The value of orders, in \(\pounds\), made to a firm over the internet has distribution \(\mathrm { N } \left( \mu , \sigma ^ { 2 } \right)\). A random sample of \(n\) orders is taken and \(\bar { X }\) denotes the sample mean.
- Write down the mean and variance of \(\bar { X }\) in terms of \(\mu\) and \(\sigma ^ { 2 }\).
A second sample of \(m\) orders is taken and \(\bar { Y }\) denotes the mean of this sample.
An estimator of the population mean is given by
$$U = \frac { n \bar { X } + m \bar { Y } } { n + m }$$ - Show that \(U\) is an unbiased estimator for \(\mu\).
- Show that the variance of \(U\) is \(\frac { \sigma ^ { 2 } } { n + m }\).
- State which of \(\bar { X }\) or \(U\) is a better estimator for \(\mu\). Give a reason for your answer.