Chapter 8 Handout

Introduction to Hypothesis Testing:

One Population Value

Chapter 8 Summary
Hypothesis Testing for One Population Value:
1. Population Mean (

(population standard deviation) is given (known):

Use z/standard normal/bell shaped distribution
(pop std dev) is not given but s (sample std dev) is given
Use students t distribution

2. Population proportion ()
Use z/standard normal/bell shaped distribution
3. Population variance (
Use (Chi-Square) distribution
PS: population standard deviation =

What is a Hypothesis?
A hypothesis is an
assumption about the
population parameter.

A parameter is a
Population mean or
proportion

The parameter must be

identified before
analysis.

I assume the mean GPA

of this class is 3.5!

1984-1994 T/Maker Co.

The Null Hypothesis, H0

States the Assumption (numerical) to be tested

e.g. The average # TV sets in US homes is at
least 3 (H0: 3)

Begin with the assumption that the null

hypothesis is TRUE.
(Similar to the notion of innocent until proven guilty)

Refers to the Status Quo

Always contains the = sign
The Null Hypothesis may or may not be rejected.

The Alternative Hypothesis, H1

or HA

Is the opposite of the null hypothesis

e.g. The average # TV sets in US homes is
less than 3 (H1: < 3)

Challenges the Status Quo

Never contains the = sign

The Alternative Hypothesis may or may

not be accepted

Identify the Problem

Steps:
State the Null Hypothesis (H : 3)
0

State its opposite, the Alternative

Hypothesis (H1: < 3)
Hypotheses are mutually exclusive &
exhaustive
Sometimes it is easier to form the
alternative hypothesis first.

Hypothesis Testing Process

Assume the
population
mean age is 50.
(Null Hypothesis)

Is X 20 50?
No, not likely!

Population
The Sample
Mean Is 20

REJECT
Null Hypothesis

Sample

Reason for Rejecting H0

Sampling Distribution
It is unlikely
that we would
get a sample
mean of this
value ...

... Therefore, we
reject the null
hypothesis that
= 50.
... if in fact this were
the population mean.

20

= 50

H0

Sample Mean

Level of Significance,

Defines Unlikely Values of Sample Statistic

if Null Hypothesis Is True

Called Rejection Region of Sampling

Distribution

Designated (alpha)

Typical values are 0.01, 0.05, 0.10

Selected by the Researcher at the Start

Provides the Critical Value(s) of the Test

Level of Significance, and

the Rejection Region
H0: 3
H1: < 3
H0: 3
H1: > 3
H0: 3
H1: 3

Rejection
Regions

Critical
Value(s)

/2

Errors in Making Decisions

Type I Error
Reject True Null Hypothesis
Has Serious Consequences
Probability of Type I Error Is

Called Level of Significance

Type II Error
Do Not Reject False Null Hypothesis
Probability of Type II Error Is (Beta)

Result Possibilities
H0: Innocent
Jury Trial
Actual Situation

Hypothesis Test
Actual Situation

Verdict

Innocent Guilty Decision H0 True H0 False

Innocent

Do Not
Reject
H0

Guilty

Correct
Error

Error

Correct Reject
H0

1-

Type II
Error ( )

Type I
Error
( )

Power
(1 - )

 & Have an
Inverse Relationship
Reduce probability of one error
and the other one goes up.

Factors Affecting
Type II Error,

True Value of Population Parameter

Significance Level

Increases When Decreases

Population Standard Deviation

Increases When Difference Between Hypothesized

Parameter & True Value Decreases

Increases When Increases

Sample Size n
Increases When n Decreases

3 Methods for Hypotheses Tests

Refer to Figure 8-6 (page 299) for a hypothesis test for means with (pop.

std. dev.) is given:

Method 1: Comparing XX critical) with X

Method 2: Z test, i.e., comparing Z critical) with Z (or Z statistics or Z
calculated)
Method 3: Comparing significance level) with p-value
You can modify those three methods for other cases. For example, if is
unknown, you must use students t distribution. If you would like to use
Method 2, please compare t t critical) with t (or t statistics or t calculated).
Refer to Figure 8-8 (page 303).

You always get:

Z critical) from Z distribution
tt critical) from students t distribution
.critical) from distribution
You always get:
Z or Z calculated or Z statistics from sample (page 299 and Figure 8-6)
t or t calculated or t statistics from sample (Figure 8-8, page 299)
.or calculated or statistics from sample (Figure 8-19, page 322)

Z-Test Statistics (Known)

Convert Sample Statistic (e.g.,
Standardized Z Variable
X X X
Z

X
n

)X
to

Test Statistic

Compare to Critical Z Value(s)

If Z test Statistic falls in Critical Region, Reject

H0; Otherwise Do Not Reject H0

p Value Test

Probability of Obtaining a Test Statistic More

Extreme or ) than Actual Sample Value
Given H0 Is True

Called Observed Level of Significance

Smallest Value of a H0 Can Be Rejected

Used to Make Rejection Decision

If p value Do Not Reject H0

If p value <, Reject H0

Hypothesis Testing: Steps

Test the Assumption that the true mean #
of TV sets in US homes is at least 3.
1.

State H0

H0 : 3

2.

State H1

H1 :

3.

Choose

= .05

4.

Choose n

n = 100

5.

Choose Method: Z Test (Method 2)

Hypothesis Testing: Steps

(continued)

Test the Assumption that the average # of

TV sets in US homes is at least 3.
6. Set Up Critical Value(s)

Z = -1.645

7. Collect Data

100 households surveyed

8. Compute Test Statistic

Computed Test Stat.= -2

9. Make Statistical Decision

Reject Null Hypothesis

10. Express Decision

than 3 in the US

The true mean # of TV set

households.

is less

One-Tail Z Test for Mean

(Known)

Assumptions
Population Is Normally Distributed
If Not Normal, use large samples
Null Hypothesis Has =, , or Sign Only

Z Test Statistic:

x x
x
z

x
n

Rejection Region
H0:
H1: < 0

H0: 0
H1: > 0

Reject H0

Reject H 0

Must Be Significantly
Below = 0

Small values dont contradict H0

Dont Reject H0!

Example: One Tail Test

Does an average box of
cereal contain more than
368 grams of cereal? A
random sample
of 25 boxes
_
showed X = 372.5. The
company has specified to
be 15 grams. Test at the
0.05 level.

368 gm.

H0: 368
H1: > 368

Finding Critical Values:

One Tail
What Is Z Given = 0.05?
.50
-.05
.45

Z = 1
= .05

0 1.645 Z
Critical Value
= 1.645

Standardized Normal
Probability Table (Portion)

.04

.05

.06

1.6 .4495 .4505 .4515

1.7 .4591 .4599 .4608
1.8 .4671 .4678 .4686
1.9 .4738 .4744 .4750

Example Solution: One Tail

H0: 368
H1: > 368
= 0.025
n = 25
Critical Value: 1.645
Reject
.05

0 1.645 Z

Test Statistic:

X
Z
1.50

n
Decision:
Do Not Reject Ho at = .05
Conclusion:
No Evidence True Mean
Is More than 368

p Value Solution
p Value is P(Z 1.50) = 0.0668
Use the
alternative
hypothesis
to find the
direction of
the test.

p Value

.0668

1.0000
- .9332
.0668

.9332

0 1.50
From Z Table:
Lookup 1.50

Z
Z Value of Sample
Statistic

p Value Solution
(p Value = 0.0668) ( = 0.05).
Do Not Reject.
p Value = 0.0668
Reject
= 0.05

1.50

Test Statistic Is In the Do Not Reject Region

Example: Two Tail Test

Does an average box of
cereal contains 368 grams of
cereal? A random sample of
25 boxes showed X = 372.5.
The company has specified
to be 15 grams. Test at the
0.05 level.

368 gm.

H0: 368
H1: 368

Example Solution: Two Tail

H0: 386
H1: 386

Test Statistic:

= 0.05
n = 25
Critical Value: 1.96
Reject
.025

.025
-1.96

0 1.96

X 372.5 368
Z

1.50

15
n
25
Decision:
Do Not Reject Ho at = .05
Conclusion:
No Evidence that True
Mean Is Not 368

Two tail hypotheses tests =

Confidence Intervals

_
For X = 372.5oz, = 15 and n = 25,
The 95% Confidence Interval is:

372.5 - (1.96) 15/ 25 to 372.5 + (1.96) 15/ 25

or
366.62 378.38
If this interval contains the Hypothesized mean (368), we
do not reject the null hypothesis. It does. Do not reject Ho.

t-Test: Unknown
Assumptions
Population is normally distributed
If not normal, only slightly skewed & a large
sample taken

Parametric test procedure

t test statistic

X
t
S
n

Example: One Tail t-Test

Does an average box of cereal
contain more than 368 grams
of cereal? A random sample of
36 boxes showed X = 372.5,
ands 15. Test at the 0.01
level.

is not
given,

368 gm.

H0: 368
H1: 368

Example Solution: One Tail

H0: 368
Test Statistic:
H1: 368
X
372.5 368
t

1.80
= 0.01
S
15
n
36
n = 36, df = 35
Critical Value: 2.4377
Decision:
Reject
Do Not Reject Ho at = .01
.01

0 2.4377 Z

Conclusion:
No Evidence that True
Mean Is More than 368

Proportions
Involves categorical variables
Fraction or % of population in a category
If two categorical outcomes, binomial
distribution

Either possesses or doesnt possess the characteristic

Sample proportion (p)

number of successes
p X

n
samplesize

Example:Z Test for Proportion

Problem: A marketing company claims
that it receives = 4% responses from its
Mailing.
Approach: To test this claim, a random
sample of n = 500 were surveyed with x =
25 responses.
Solution: Test at the = .05 significance
level.

Z Test for Proportion:

Solution
H0: .04
H1: .04

Test Statistic:

= .05
n = 500, x = 25
p = x/n = 25/500 = 0.05

p-
Z
(1 - )
n

Critical Values: 1.96

Reject

Reject

.025

.025

.05-.04
=
= 1.14
.04 (1 - .04)
500

Decision:

Do not reject Ho at = .05

Conclusion:

We do not have sufficient

evidence to reject the companys
claim of 4% response rate.