Chapter Topics

Hypothesis Testing Methodology

Z Test for the Mean (Known)
p-Value Approach to Hypothesis Testing
Connection to Confidence Interval Estimation
One Tail Test
t Test of Hypothesis for the Mean
Z Test of Hypothesis for the Proportion
1999 Prentice-Hall, Inc. Chap. 8 - 1
 What is a Hypothesis?
A hypothesis is an I assume the mean GPA
assumption about the of this class is 3.5!
population parameter.
A parameter is a
Population mean or
proportion
The parameter must be
identified before
analysis.

1984-1994 T/Maker Co.

1999 Prentice-Hall, Inc. Chap. 8 - 2

 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.
1999 Prentice-Hall, Inc. Chap. 8 - 3
 The Alternative Hypothesis, H1

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

1999 Prentice-Hall, Inc. Chap. 8 - 4

 Identify the Problem

Steps:
State the Null Hypothesis (H0: 3)

State its opposite, the Alternative

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

alternative hypothesis first.

1999 Prentice-Hall, Inc. Chap. 8 - 5

 Hypothesis Testing Process

Assume the
population
mean age is 50.
(Null Hypothesis) Population
The Sample
Is X 20 50? Mean Is 20
No, not likely!

REJECT
Null Hypothesis Sample

1999 Prentice-Hall, Inc. Chap. 8 - 6

 Reason for Rejecting H0

Sampling Distribution
It is unlikely
that we would ... Therefore, we
get a sample reject the null
mean of this hypothesis that
value ... = 50.
... if in fact this were
the population mean.

20 = 50 Sample Mean
H0
1999 Prentice-Hall, Inc. Chap. 8 - 7
 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
1999 Prentice-Hall, Inc. Chap. 8 - 8
 Level of Significance, and
the Rejection Region
H0: 3 Critical
H1: < 3 Value(s)
Rejection 0
Regions
H0: 3
H1: > 3
0
/2
H0: 3
H1: 3
0

1999 Prentice-Hall, Inc. Chap. 8 - 9

 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)

1999 Prentice-Hall, Inc. Chap. 8 - 10

 Result Possibilities
H0: Innocent
Jury Trial Hypothesis Test
Actual Situation Actual Situation
Verdict Innocent Guilty Decision H0 True H0 False
Do Not Type II
Innocent Correct Error Reject 1-
Error ( )
H0
Type I Power
Guilty Error Correct Reject Error
H0 (1 - )
( )

1999 Prentice-Hall, Inc. Chap. 8 - 11

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

1999 Prentice-Hall, Inc. Chap. 8 - 12

 Z-Test Statistics (Known)

Convert Sample Statistic (e.g., ) to

X
Standardized Z Variable

X X X Test Statistic
Z
X
n
Compare to Critical Z Value(s)
If Z test Statistic falls in Critical Region, Reject
H0; Otherwise Do Not Reject H0

1999 Prentice-Hall, Inc. Chap. 8 - 13

 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

1999 Prentice-Hall, Inc. Chap. 8 - 14

 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 Test: Z Test (or p Value)

1999 Prentice-Hall, Inc. Chap. 8 - 15

 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
8. Compute Test Statistic
9. Make Statistical Decision
10. Express Decision
than 3 in the US
100 households surveyed
Computed Test Stat.= -2
Reject Null Hypothesis
The true mean # of TV set is less
households.

1999 Prentice-Hall, Inc. Chap. 8 - 16

 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

1999 Prentice-Hall, Inc. Chap. 8 - 17

 Rejection Region

H0: H0: 0
H1: < 0 H1: > 0
Reject H0 Reject H 0

0 Z 0 Z
Must Be Significantly Small values dont contradict H0
Below = 0 Dont Reject H0!
1999 Prentice-Hall, Inc. Chap. 8 - 18
 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 368 gm.
company has specified to
be 15 grams. Test at the H0: 368
0.05 level. H1: > 368

1999 Prentice-Hall, Inc. Chap. 8 - 19

 Finding Critical Values:
One Tail
Standardized Normal
What Is Z Given = 0.05? Probability Table (Portion)
.50
-.05 Z = 1 Z .04 .05 .06
.45 1.6 .5495 .5505 .5515
= .05
1.7 .5591 .5599 .5608

0 1.645 Z 1.8 .5671 .5678 .5686

Critical Value 1.9 .5738 .5744 .5750
= 1.645
1999 Prentice-Hall, Inc. Chap. 8 - 20
 Example Solution: One Tail

H0: 368 Test Statistic:

H1: > 368
X
= 0.025 Z 1.50
n = 25

n
Critical Value: 1.645
Decision:
Reject
Do Not Reject at = .05
.05
Conclusion:
No Evidence True Mean
0 1.645 Z Is More than 368
1999 Prentice-Hall, Inc. Chap. 8 - 21
 p Value Solution
p Value is P(Z 1.50) = 0.0668
Use the
alternative p Value 1.0000
hypothesis .0668
to find the - .9332
direction of .0668
the test. .9332
0 1.50 Z

From Z Table: Z Value of Sample

Lookup 1.50 Statistic
1999 Prentice-Hall, Inc. Chap. 8 - 22
 p Value Solution

(p Value = 0.0668) ( = 0.05).

Do Not Reject.
p Value = 0.0668

Reject
= 0.05

0 1.50 Z
Test Statistic Is In the Do Not Reject Region
1999 Prentice-Hall, Inc. Chap. 8 - 23
 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 368 gm.
to be 15 grams. Test at the
0.05 level.
H0: 368
H1: 368

1999 Prentice-Hall, Inc. Chap. 8 - 24

 Example Solution: Two Tail
H0: 386 Test Statistic:
H1: 386
X 372.5 368
= 0.05 Z 1.50
15
n = 25 n 25
Critical Value: 1.96
Decision:
Reject
Do Not Reject at = .05
.025 .025
Conclusion:
No Evidence that True
-1.96 0 1.96 Z Mean Is Not 368
1999 Prentice-Hall, Inc. Chap. 8 - 25
 Connection to
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.
1999 Prentice-Hall, Inc. Chap. 8 - 26
 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

1999 Prentice-Hall, Inc. Chap. 8 - 27

 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,
and 15. Test at the 0.01
368 gm.
level.

is not H0: 368

given, H1: 368

1999 Prentice-Hall, Inc. Chap. 8 - 28

 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 500 were surveyed with 25
responses.
Solution: Test at the = .05 significance
level.
1999 Prentice-Hall, Inc. Chap. 8 - 29
 Z Test for Proportion:
Solution
H0: p .04
Test Statistic:
H1: p .04
p - ps .04 -.05
= .05 Z = = 1.14
p (1 - p) .04 (1 - .04)
n = 500 n 500
Critical Values: 1.96
Decision:
Reject Reject Do not reject at = .05
.025 .025 Conclusion:
We do not have sufficient
evidence to reject the companys
0 Z claim of 4% response rate.
1999 Prentice-Hall, Inc. Chap. 8 - 30