Chap 09 Mod

Chapter 9 Hypothesis Testing: Single Population
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 9-1
Chapter Goals
After completing this chapter, you should be able to:

Formulate null and alternative hypotheses for applications involving

a single population mean from a normal distribution a single population proportion (large samples) the variance of a normal distribution
Formulate a decision rule for testing a hypothesis Know how to use the critical value and p-value approaches to test the null hypothesis (for both mean and proportion problems) Know what Type I and Type II errors are Assess the power of a test

9.1
What is a Hypothesis?
A hypothesis is a claim (assumption) about a population parameter:

population mean
Example: The mean monthly cell phone bill of this city is = $42
population proportion
Example: The proportion of adults in this city with cell phones is p = .68
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
Ch. 9-3
The Null Hypothesis, H0

States the assumption (numerical) to be tested

Example: The average number of TV sets in U.S. Homes is equal to three ( H0 : ! 3 )
Is always about a population parameter, not about a sample statistic

: !3 :X!3
Ch. 9-4
The Null Hypothesis, H0

(continued)

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 = , or u sign May or may not be rejected
Ch. 9-5
The Alternative Hypothesis, H1

Is the opposite of the null hypothesis

e.g., The average number of TV sets in U.S. homes is not equal to 3 ( H1: 3 )

Challenges the status quo Never contains the = , or u sign May or may not be supported Is generally the hypothesis that the researcher is trying to support
Ch. 9-6
Hypothesis Testing Process

Claim:the population mean age is 50. (Null Hypothesis: H0: = 50 )
Population
Now select a random sample
Is X! 20 likely if
If not likely, REJECT Null Hypothesis
= 50?
Suppose the sample mean age is 20: X = 20 Sample
Ch. 9-7
Reason for Rejecting H0

Sampling Distribution of X
20
= 50
IfH0 is true
If it is unlikely that we would get a sample mean of this value ...
... if in fact this were the population mean
... then we reject the null hypothesis that = 50.

Ch. 9-8
Level of Significance, E

Defines the unlikely values of the sample statistic if the null hypothesis is true

Defines rejection region of the sampling distribution Typical values are .01, .05, or .10
Is designated by E, (level of significance)

Is selected by the researcher at the beginning Provides the critical value(s) of the test
Ch. 9-9
Level of Significance and the Rejection Region

Level of significance = E
Represents critical value
H0 : = 3 H1 : 3
E/2
Two-tail test
E/2
0 Rejection region is shaded
H0 : 3 H1 : >3
Upper-tail test
E
0
H0 : 3 H1 : < 3
E
Lower-tail test
0
Ch. 9-10
Errors in Making Decisions

Type I Error Reject a true null hypothesis Considered a serious type of error The probability of Type I Error is E

Called level of significance of the test Set by researcher in advance
Ch. 9-11
Errors in Making Decisions

(continued)

Type II Error Fail to reject a false null hypothesis The probability of Type II Error is
Ch. 9-12
Outcomes and Probabilities

Possible Hypothesis Test Outcomes Actual Situation Decision ey: Outcome (Probability) Do Not Reject H0 Reject H0 H0 True No Error (1 - E ) Type I Error (E) H0 False Type II Error ( ) No Error (1- )
Ch. 9-13
Type I & II Error Relationship

Type I and Type II errors can not happen at
the same time

Type I error can only occur if H0 is true Type II error can only occur if H0 is false , then )
Ch. 9-14
If Type I error probability ( E ) Type II error probability (

Factors Affecting Type II Error

All else equal,

when the difference between hypothesized parameter and its true value

when when when
n
Ch. 9-15
Power of the Test

The power of a test is the probability of rejecting a null hypothesis that is false i.e.,

Power = P(Reject H0 | H1 is true)
Power of the test increases as the sample size increases
Ch. 9-16
Hypothesis Tests for the Mean

Hypothesis Tests for Q W nown W Unknown
Ch. 9-17
9.2
Test of Hypothesis for the Mean ( Known)

Convert sample result ( ) to a z value
Hypothesis Tests for Q Known Unknown
Consider the test
The decision rule is:
"
(Assume the population is normal)
e ect H0 if z
"z
n
Ch. 9- 8
Decision Rule
e ect i
! "
H 0: = H 1: >
0 0
Alternate rule:
Reject H0 if x "
0 Z
/ n
Do not reject H0
0
0
0
z
z
Reject H0
x
Critical value x c
Ch. 9-19
p-Value Approach to Testing

p-value: Probability of obtaining a test statistic more extreme ( or u ) than the observed sample value given H0 is true

Also called observed level of significance Smallest value of E for which H0 can be rejected
Ch. 9-20
p-Value Approach to Testing

(continued)

Convert sample result (e.g., x ) to test statistic (e.g., z statistic ) Obtain the p-value For an upper p - value ! P(z tail test:
! P(z x- 0 , given that H0 is true) / n x- 0 | ! 0) / n
Decision rule: compare the p-value to E

If p-value <E, reject H0 If p-value uE , do not reject H0

Ch. 9-21
Example: Upper-Tail Z Test for Mean (W Known)

A phone industry manager thinks that customer monthly cell phone bill have increased, and now average over $52 per month. The company wishes to test this claim. (Assume W = 10 is known)
Form hypothesis test: H0: 52 H1: > 52 the average is not over $52 per month the average is greater than $52 per month
(i.e., sufficient evidence exists to support the managers claim)
Ch. 9-22
Example: Find Rejection Region

(continued)

Suppose that E = .10 is chosen for this test

Reject H0
Find the rejection region:
E = .10
Do not reject H0
1.28
Reject H0
Reject H0 if z !
0 " 1.28 / n
Ch. 9-23
Example: Sample Results

(continued)
Obtain sample and compute the test statistic Suppose a sample is taken with the following results: n = 64, x = 53.1 (W = 10 was assumed known)

Using the sample results,

n
.1 2 ! 0. 10
Ch. 9-24
Example: Decision
(continued)
Reach a decision and interpret the result:

Reject H0
E= .10
Do not reject H0
1.28 z = 0.88
Reject H0
Do not reject H0 since z = 0.88 < 1.28 i.e.: there is not sufficient evidence that the mean bill is over $52
Example: p-Value Solution

(continued)
Calculate the p-value and compare to E

(assuming that = 52.0) p-value = .1894
P(x u 3. | !
Reject H0 E= .10
. ) .
0
Do not reject H0
3. ! z u /
1.28 Z = .88
Reject H0
! (z u . !.
) ! .
Do not reject H0 since p-value = .1894 >E = .10

One-Tail Tests

In many cases, the alternative hypothesis focuses on one particular direction

H 0: 3 H 1: > 3 H 0: 3 H 1: < 3 This is an upper-tail test since the alternative hypothesis is focused on the upper tail above the mean of 3 This is a lower-tail test since the alternative hypothesis is focused on the lower tail below the mean of 3
Ch. 9-27
Upper-Tail Tests

There is only one critical value, since the rejection area is in only one tail
H 0: 3 H 1: > 3
Do not reject H0
Reject H0
x
Critical value x c
Lower-Tail Tests
H 0: 3

There is only one critical value, since the rejection area is in only one tail
H 1: < 3
E
Reject H0 Do not reject H0
-zE
x
Critical value x c
Ch. 9-29
Two-Tail Tests

In some settings, the alternative hypothesis does not specify a unique direction
H 0: = 3 H 1: { 3
E/2

E/2
3
There are two critical values, defining the two regions of rejection
x
Reject H0
Reject H0
Do not reject H0
-zE/2
+zE/2
Lower critical value

Upper critical value

Ch. 9-30
Hypothesis Testing Example

Test the claim that the true mean # of TV sets in US homes is equal to 3. (Assume = 0.8)

State the appropriate null and alternative hypotheses H 0: = 3 , H1: 3 (This is a two tailed test) Specify the desired level of significance Suppose that E = .05 is chosen for this test Choose a sample size Suppose a sample of size n = 100 is selected
Ch. 9-31

(continued)

Determine the appropriate technique is known so this is a z test Set up the critical values For E = .05 the critical z values are 1.96 Collect the data and compute the test statistic Suppose the sample results are n = 100, x = 2.84 ( = 0.8 is assumed known) So the test statistic is:
!
X n
0
2.

0. 100
.1 .0
! 2 .0
Ch. 9-32

(continued)

Is the test statistic in the rejection region?

E = .05/2 E = .05/2
Reject H0 if z < -1.96 or z > 1.96; otherwise do not reject H0
Reject H0
Do not reject H0
Reject H0
-z = -1.96
+z = +1.96
Here, z = -2.0 < -1.96, so the test statistic is in the rejection region

(continued)

Reach a decision and interpret the result

E = .05/2 E = .05/2
Reject H0
Do not reject H0
Reject H0
-z = -1.96 -2.0
+z = +1.96
Since z = -2.0 < -1.96, we reject the null hypothesis and conclude that there is sufficient evidence that the mean number of TVs in US homes is not equal to 3
Example: p-Value

Example:How likely is it to see a sample mean of 2.84

(or something further from the mean, in either direction) if the true mean is Q = 3.0?
x = 2.84 is translated to a z score of z = -2.0

P(z P(z 2.0) ! .0228 2.0) ! .0228
E/2 = .025 E/2 = .025
.0228
.0228
p-value = .0228 + .0228 = .0456

-1.96 -2.0
1.96 2.0
Z
Ch. 9-35
Example: p-Value
(continued)

Compare the p-value with E

If p-value <E, reject H0 If p-value uE , do not reject H0

E/2 = .025 E/2 = .025
Here: p-value = .0456 E = .05 Since .0456 < .05, we reject the null hypothesis
.0228
.0228
-1.96 -2.0
1.96 2.0
Z
Ch. 9-36
9.3
t Test of Hypothesis for the Mean ( Unknown)

Convert sample result ( x ) to a t test statistic
Hypothesis Tests for Q Known Unknown The decision rule is:
Consider he es
: ! : "
(Assume he popula ion is normal)
e ec
x ! s n
"
Ch. 9 37
t Test of Hypothesis for the Mean ( Unknown)

(continued)

For a two-tailed test:

Consider the test
(Assume the population is normal, and the population variance is unknown)
e ect H0 if t !
0 s n
t n-1,
or if t !
0 " t n-1, s n
Ch. 9-38
Example: Two-Tail Test (W Unknown)

The average cost of a hotel room in Chicago is said to be $168 per night. A random sample of 25 hotels resulted in x = $172.50 and s = $15.40. Test at the E = 0.05 level.
(Assume the population distribution is normal)
H0: = 168 H1: { 168
Ch. 9-39
Example Solution: Two-Tail Test

H0: = 168 H1: { 168

E/2=.025
E/2=.025
E= 0.05
n= 25 W is unknown, so use a t statistic Critical Value: t24 , .025 = 2.0639
Reject H0
-t n-1, /2 -2.0639
!
Do not reject H0
1.46
t n-1, /2 2.0639
Reject H0
t n 1 !
x s n
172.50 168 ! 1.46 15.40 25
Do not reject H0: not sufficient evidence that true mean cost is different than $168
Ch. 9-40
Example: One-Tail Test

Grand Vegetables is a producer of wide variety of frozen vegetables. The company president has asked you to determine if the weekly sales of 16-ounce packages of frozen broccoli has increased. The mean weekly sales per store has been 2,400 packages over the past 6 months. You have obtained a random sample of sales data from 134 stores for your study. This random sample has a mean of 3,593 and standard deviation 4,919. a) Which test statistic can be employed? b) State null-hypothesis and alternative hypothesis? c) Calculate test statistic and state your conclusion? d) Calculate the p-value, and verify part c ?
Example: One-Tail Test

In contract negotiations a company claims that a new incentive scheme has resulted in average weekly earnings of at least $400 for all customer service workers. A union representative takes a random sample of 15 workers and finds that their weekly earnings have an average of $381.5 and a standard deviation of $48.6. Assume a normal distribution. a) Which test statistic can be employed? b) State null-hypothesis and alternative hypothesis? c) Calculate test statistic and state your conclusion? d) Calculate the p-value, and verify part c ?
9.5
Power of the Test

Recall the possible hypothesis test outcomes:
Actual Situation Decision H0 True No error (1 - E ) Type I Error (E ) H0 False Type II Error ( ) No Error (1- )
Key: Outcome (Probability)
Do Not Reject H0 Reject H0

denotes the probability of Type II Error 1 is defined as the power of the test Power = 1 = the probability that a false null hypothesis is rejected
Ch. 9-43
Type II Error
Assume the population is normal and the population variance is known. Consider the test
H0 : !
H1 : "
0
0
e ect H0 i
"
or
e ect H0 i
"
I the null hypothesis is alse and the true mean is *, then the probability o type II error is !P
c
! * ! P
* n
Ch. 9-44
Type II Error Example

Type II error is the probability of failing to reject a false H0

Suppose we fail to reject H0: u 52 when in fact the true mean is * = 50
E 50
Reject H0: u 52
52
xc
Do not reject H0 : u 52
Ch. 9-45

(continued)

Suppose we do not reject H0: u 52 when in fact the true mean is * = 50

This is the range of x where H0 is not rejected
This is the true distribution of x if
= 50
50
Reject H0: u 52
52
xc
Ch. 9-46

(continued)

Suppose we do not reject H0: u 52 when in fact the true mean is * = 50

Here, = P( x u x c ) if * = 50
50
Reject H0: u 52
52
xc
Ch. 9-47
Calculating

Suppose n = 64 ,
= 6 , and E = .05
xc !
(for H0 :
z
6 ! 52 1.6 5 ! 50.766 n 6
So = P( x u 50.766 ) if * = 50
u 52)
50
50.766
52
Ch. 9-48
Reject H0: u 52
xc
Calculating
(continued)

Suppose n = 64 ,
= 6 , and E = .05
50.766 50 P( x u 50.766 | * ! 50) ! P z u ! P(z u 1.02) ! .5 .3461 ! .1539 6 64

Probability of type II error:
E
= .1539
50 52
Reject H0: u 52
xc
Ch. 9-49
Power of the Test Example

If the true mean is * = 50,

The probability of Type II Error = The power of the test = 1

Decision
= 0.1539 0.1539 = 0.8461

H0 False Type II Error = 0.1539 No Error 1 - = 0.8461
=1
Actual Situation Key: Outcome (Probability) H0 True No error 1 - E = 0.95 Type I Error E = 0.05 Do Not Reject H0 Reject H0 (The value of
and the power will be different for each *)

Ch. 9-50
9.6
Hypothesis Tests of one Population Variance
Goal: Test hypotheses about the population variance, 2

If the population is normally distributed,
2 n 1
(n 1)s
2
has a chi-square distribution with (n of freedom
1) degrees
Statistics for Business and Economics, 6e 2007 Pearson Education, Inc.
Chap 11-51
Hypothesis Tests of one Population Variance

(continued)
The test statistic for hypothesis tests about one population variance is
2 n 1
(n 1)s
2 0
Chap 11-52
Decision Rules: Variance

Population variance Lower-tail test: H 0: H 1:
2u 2< 0 2 2 0
Upper-tail test: H 0: H 1:
2 2> 0 2 2 0
Two-tail test: H 0: 2= H 1: 2
0 2 0 2
E
2 n 1,1E
E
2 n 1,E
E/2
2 n 1,1E / 2
E/2
2 n 1,E / 2
Reject H0 if
2 n 1 2 n 1,1E
Reject H0 if
2 n 1
"
Reject H0 if or
2 n 1 2 n 1
2 ,E
"
2 n 1,E / 2 2 n 1,1E / 2
Chap 11-53
Example: Tests of variance

A quality control manager has asked you to determine if the variance of impurities in its shipment of fertilizer is within the established standard. This standard states that for 100-pound bags of fertilizer, the variance in the pounds of impurities cannot exceed 4. For this purpose a random sample of 20 bags is obtained, and the pounds of impurities are measured for each bag. The sample variance is computed to be 6.62. Which test statistic can be employed? State null-hypothesis and alternative hypothesis? Calculate test statistic and state your conclusion? Calculate the p-value, and verify part c ?
Ch. 9-54
a) b) c) d)
Chapter Summary

Addressed hypothesis testing methodology Performed Z Test for the mean ( known) Discussed critical value and p-value approaches to hypothesis testing Performed one-tail and two-tail tests Performed t test for the mean ( unknown) Discussed type II error and power of the test Performed a hypothesis test for the variance ( 2)

Ch. 9-55

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Chapter 9 Hypothesis Testing: Single Population

Formulate null and alternative hypotheses for applications involving

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

The Null Hypothesis, H0

States the assumption (numerical) to be tested

Is always about a population parameter, not about a sample statistic

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

The Null Hypothesis, H0

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

The Alternative Hypothesis, H1

Is the opposite of the null hypothesis

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Hypothesis Testing Process

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Reason for Rejecting H0

If it is unlikely that we would get a sample mean of this value ...

... if in fact this were the population mean

... then we reject the null hypothesis that = 50.

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Is designated by E, (level of significance)

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Level of Significance and the Rejection Region

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Errors in Making Decisions

Called level of significance of the test Set by researcher in advance

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Errors in Making Decisions

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Outcomes and Probabilities

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Type I & II Error Relationship

If Type I error probability ( E ) Type II error probability (

Factors Affecting Type II Error

All else equal,

when when when

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Power of the Test

Power = P(Reject H0 | H1 is true)

Power of the test increases as the sample size increases

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Hypothesis Tests for the Mean

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Test of Hypothesis for the Mean ( Known)

Consider the test

The decision rule is:

p-Value Approach to Testing

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

p-Value Approach to Testing

Decision rule: compare the p-value to E

If p-value <E, reject H0 If p-value uE , do not reject H0

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Example: Upper-Tail Z Test for Mean (W Known)

(i.e., sufficient evidence exists to support the managers claim)

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Example: Find Rejection Region

Suppose that E = .10 is chosen for this test

Find the rejection region:

Example: Sample Results

Using the sample results,

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Reach a decision and interpret the result:

Example: p-Value Solution

Calculate the p-value and compare to E

172.50 168 ! 1.46 15.40 25

Goal: Test hypotheses about the population variance, 2