Course Project - Part B

Hypothesis Testing and Confidence Intervals

Ahmed Nijim Math533

Project Part B: Hypothesis Testing and Confidence Intervals

a. The average (mean) annual income was less than $50,000 Null Hypothesis: The average annual income was greater than or equal to $50,000 H: > 50000 Alternate Hypothesis: The average annual income was less than $50,000 Ha: > 50000 Analysis !lan: "igni#icance $evel, %&0 05 "ince the sample si'e, n > (0 ) will use '*test #or mean to test the given hypothesis As the alternative hypothesis is Ha: > 50000, the given test is a one*taile+ '*test ,ritical -alue an+ .ecision /ule: The critical value #or signi#icance level, %&0 05 #or a lower*taile+ '*test is given as*0 125 .ecision /ule: /e3ect H, i# ' 4 statistic, *0 125 Test "tatistic * minita5 6ne*"ample 7: )ncome 8$00009 Test o# mu & 50 vs : 50 The assume+ stan+ar+ +eviation & 02 55 ;5< =pper -aria5le N >ean "t.ev "? >ean @oun+ 7 ! )ncome 8$00009 50 2( 2A 02 55 B 01 21 A1 *( 0C 0 000 )nterpretation o# /esults an+ ,onclusion: "ince the !*value 80 00009 is smaller than the signi#icance level 80 059, we re3ect the null hypothesis The p*value implies the pro5a5ility o# re3ecting a true null hypothesis The signi#icance level o# 0 05, there is enough evi+ence to support the claim that the average annual income was less than $50,000 ,on#i+ence )nterval * minita5 6ne*"ample 7 The assume+ stan+ar+ +eviation & 02 55 N >ean "? >ean ;5< ,) 50 2( 2A B 01 8(; 25, 2C 509 The ;5< upper con#i+ence limit is 2C 50 "ince, 50 00 lies 5eyon+ the ;5< upper con#i+ence limit, we can support the claim that the average annual income was less than $50,000 b. The true population proportion of customers who live in an urban area exceeds 40 . Null Hypothesis: The true population proportion o# customers who live in an ur5an area is less than or equal to 20< H: p : 0 20 Alternate Hypothesis: The true population proportion o# customers who live in an ur5an area is greater than 20<

Ha: p > 0 20 Analysis !lan: "igni#icance $evel, %&0 05 an+ '*test #or proportion to test the given hypothesis As the alternative hypothesis is Ha: p > 0 20, the given test is a one*taile+ '*test ,ritical -alue an+ .ecision /ule: The critical value #or signi#icance level, %&0 05 #or an upper*taile+ '*test is given as 0 125 .ecision /ule: /e3ect H, i# ' 4 statistic > 0 125 Test "tatistic * minita5 Num5er o# ?vents 8=r5an ,ustomers9 & B0 Num5er o# Trials 8,ustomers9 & 50 Test an+ ,) #or 6ne !roportion Test o# p & 0 2 vs p > 0 2 ;5< $ower "ample D N "ample p @oun+ 7*-alue !*-alue 0 B0 50 0 2B0000 0 (050;0 0 B; 0 (A1 )nterpretation o# /esults an+ ,onclusion: "ince the !*value 80 (A19 is greater than the signi#icance level 80 059, we #ail to re3ect the null hypothesis The p*value implies the pro5a5ility o# re3ecting a true null hypothesis A signi#icance level o# 0 05, there is not enough evi+ence to support the claim that the true population proportion o# customers who live in an ur5an area is greater than 20< ,on#i+ence )nterval 4 minta5 Test an+ ,) #or 6ne !roportion "ample D N "ample p ;5< ,) 0 B0 50 0 2B0000 80 BA(0;5, 0 551A059 The ;5< lower con#i+ence limit is 0 BA "ince 0 2B is greater than the ;5< lower con#i+ence limit, we canEt support the claim that the true population proportion o# customers who live in an ur5an area is greater than 20< c. The average (mean) number of !ears lived in the current home is less than "# !ears. $ull %!pothesis& The average (mean) number of !ears lived in the current home is greater than or e'ual to "# !ears H: > 0( Alternate Hypothesis: The average 8mean9 num5er o# years live+ in the current home is less than 0( years Ha: (0 we shall use '*test #or mean to test the given hypothesis As the alternative hypothesis is Ha: 0 125 Test "tatistic * minita5 6ne*"ample 7: Fears Test o# mu & 0( vs : 0( The assume+ stan+ar+ +eviation & 5 00( ;5< =pper -aria5le N >ean "t.ev "? >ean @oun+ 7 ! Fears 50 0B (A0 5 00( 0 CBB 0( 51C *0 A1 0 0;5 )nterpretation o# /esults an+ ,onclusion:

"ince the !*value 80 0;59 is greater than the signi#icance level 80 059 The p*value implies the pro5a5ility o# re3ecting a true null hypothesis A signi#icance level o# 0 05, there is no su##icient evi+ence to support the claim that the average num5er o# years live+ in the current home is less than 0( years ,on#i+ence )nterval * minita5 6ne*"ample 7 The assume+ stan+ar+ +eviation & 5 00( N >ean "? >ean ;5< ,) 50 0B (A0 0 CBB 800 ;11, 0( C;29 The ;5< upper con#i+ence limit is 0( C;2 "ince, 0( is smaller than the ;5< upper con#i+ence limit, we canEt support the claim that the average num5er o# years live+ in the current home is less than 0( years d. The average (mean) credit balance for suburban customers is more than $4#00 $ull %!pothesis& The average (mean) credit balance for suburban customers is less than or e'ual to $4#00. H: : 2(00 Alternate Hypothesis: The average 8mean9 cre+it 5alance #or su5ur5an customers is more than $2(00 H: > 2(00 Analysis !lan: "igni#icance $evel, %&0 05 "ince the sample si'e, n > (0 we shall use '*test #or mean to test the given hypothesis As the alternative hypothesis is Ha: > 2(00, the given test is a one*taile+ '*test ,ritical -alue an+ .ecision /ule: The critical value #or signi#icance level, %&0 05 #or an upper*taile+ '*test is given as 0 125 .ecision /ule: /e3ect H, i# ' 4 statistic > 0 125 Test "tatistic * minita5 6ne*"ample 7: ,re+it @alance 8$9 G0 Test o# mu & 2(00 vs > 2(00 The assume+ stan+ar+ +eviation & CC0 ((; ;5< $ower -aria5le N >ean "t.ev "? >ean @oun+ 7 ! ,re+it @alance 8$9 G0 05 2152 CC0 0;; 2(BC 0 CA 0 0(A )nterpretation o# /esults an+ ,onclusion: "ince the !*value 80 0(A9 is smaller than the signi#icance level 80 059, re3ecting the null hypothesis The p*value implies the pro5a5ility o# re3ecting a true null hypothesis A signi#icance level o# 0 05, there is enough evi+ence to support the claim that the average cre+it 5alance #or su5ur5an customers is more than $2(00 ,on#i+ence )nterval * minita5 6ne*"ample 7 The assume+ stan+ar+ +eviation & CC0 N >ean "? >ean ;5< ,) 50 2152 00; 82220, 2A1C9 The ;5< lower con#i+ence limit is 2220 "ince 2(00 is smaller than the ;5< lower con#i+ence limit, we can support the claim that the average cre+it 5alance #or su5ur5an customers is more than $2(00