BES Tutorial Sample Solutions, S1/13

WEEK 9 TUTORIAL EXERCISES (To be discussed in the week starting

May 6)
1. Perform the following hypothesis tests of the population mean. In each case,
illustrate the rejection regions on both the Z and distributions, and calculate
the p-value (prob-value) of the test.
(a) H0: = 50, H1: > 50, n = 100, = 55, = 10, = 0.05

Rejection region:

50
1.645
.
10100
Alternatively

10
51.645
50
1.645

100

Since

55 50
5
1.645
.
10100

Can reject H 0 and conclude that the population mean is greater than 50 .

0.05

50

51.645
reject

0.05
0
1.645

Z
reject

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(b)

H0: = 25, H1: < 25, n = 100, = 24, = 5, = 0.1

Rejection region:

25

24

25

5100

1.28

5100

Alternatively


Since

0.0000

25

1.28

5
100

24.36

1.28

Can reject H 0 and conclude that the population mean is less than 25 .




0.1

X
24.36
25

reject

2

0.1
1.28

reject

0.0228

(c) H0: = 80, H1: 80, n = 100, = 80.5, = 4, = 0.05

Rejection region:

80

Alternatively:

or

Since

1.96

4100

80.5

80

1.96

80

1.96

80

4100

1.96

4
100
4
100

79.216
80.784

1.25

is not less than 1.96 or nor greater than 1.96 we do not reject H 0 and
conclude that the population mean is equal to 80.


3

0.025

0.025

79.216

80

80.784

reject

reject

0.025

0.025

1.96
reject

1.96

1.25

reject
0.1056

0.2112

2. A real estate expert claims the current mean value of houses in a particular
area is more than $250,000. A random sample of 150 recent sales prices in the
area yields a sample mean of $265,000. It is known that house values in the
area are approximately normally distributed with a standard deviation of
$50,000.
(a)Perform an upper tail test of the null hypothesis that the population mean
house value in the area is $250,000. Use a 5% level of significance and
state the rejection (critical) region in terms of both and z.
Let X value of a house in the area

$265,000,

$50,000, ~

We wish to test
:

Rejection region:

250,000;

Since

265,000

250,000

250,000

50,000150

or

250,000

250,000

50,000150

1.645

3.67

1.645

50,000

256,715.68

150

1.645

Hence we reject H 0 and conclude that the mean house value in the area is
more than $250,000 .
(b)

Why is an upper tail test most appropriate in this case?

The nature of the research problem dictates an upper tail test. In this case we
will not believe the experts claim unless there is significant sample evidence
to do so. This implies an upper tail test.
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(c)

What is the p-value associated with the test statistic used in the part (a)
test? Interpret this value.
3.67

0.5

0.4999

0.0001

The pvalue is the probability of obtaining a test statistic more extreme than
the realized value, assuming the null hypothesis is true. The lower the pvalue,
the greater is the evidence for rejection of the null hypothesis. In this case it is
very unlikely to find a sample mean as extreme as $265,000 given a population
mean of $250,000.
(d)

Define the type I and II errors in the context of the part (a) test.

Type I Error: Concluding that housing price is more than $250,000, while it is
really $250,000.

Type II Error: Not being able to reject the claim that housing price is $250,000,
while it is really more.
3. What effect does increasing the sample size have on the outcome of a
hypothesis test? Explain your answer using the example of a one-tail test
concerning the mean of a normally distributed population with known
variance. (It is expected that students will find this question difficult)
Suppose an upper tail test


Under

:
~

The point

on N(0,1) corresponds to the point

distribution of

0,1

on the

The distribution of

is:

0 z

But suppose the true is to the right of . Then the true distribution of is
say:







0

0 z

The shaded area in the above diagram gives the probability of correctly
rejecting H0 (i.e. the power, 1 which is greater than )

Now suppose the sample size is increased. As a result:

decreases & hence

decreases.

Suppose the new sample size is n1>n.

The distribution of

will now look something like:

0 0 z

n1

Note that with a fixed the rejection region cutoff is now smaller. Again, if the
true is actually to the right of , the probability of rejecting the same
incorrect null hypothesis is higher than before. Diagrammatically the true
distribution of will be say











X
0

0 z

n1

Again the shaded area in the above diagram gives the probability of correctly
rejecting H0.

Conclusion: The probability of correctly rejecting a false H0. (the power of the
test, as discussed in lectures this week) increases as n increases given we keep
the Type I error () fixed.
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