The University of the South Pacific EC 203 Economic Statistics

Tutorial 9 Hypothesis testing for a single population

Text reference: 5th Ed. chapter 12 (Exclude section 12.5) or 6th y Ed. Chapter 13 (Exclude section 13.5)
Coverage

o Concepts of Hypothesis testing

o Hypothesis test for µ when Population Variance Known.
o The P-Value of a test of hypothesis
o Hypothesis test for µ when Population Variance unknown.
o Hypothesis test for Population Proportion(p).

Questions from textbook

1)[5 Ed 12.4] A random sample of 200 observations was taken from a normal population with standard
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deviation of 100 and produced sample mean of 150. Test the null hypothesis H0: µ = 160 against the
alternative hypothesis HA: µ < 160. Use α = 0.05.

2) [5 Ed 12.13] The average weekly wage of all the workers at a large factory is $626.40. In a random
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sample of 100 male workers at the factory, it was found that X = $682.00. Assuming that population
standard deviation is $82.09, can we conclude (with α = 0.05) that the mean weekly wage of male workers
is greater than the overall mean weekly wage?

3) [5 Ed 12.14] The manager of a department store is thinking about establishing a new billing system for
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the store’s credit customers. After a thorough financial analysis, she determines that the new system will be
cost effective only if the mean monthly account is greater than $70. A random sample of 200 monthly
accounts is drawn for which the sample mean account is $74. The manager knows that the accounts are
normally distributed with a population standard deviation of $30. Is there enough evidence at the 5%
significance level to conclude that the new system will be cost-effective?

4) [5 Ed 12.19] Find the p-value of the following test and make decision on hypothesis test:
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H : µ = 25
0

HA: µ ≠ 25

x = 29, σ = 15, n = 100, α = 0.10

5) [5 Ed 12.53] A courier service in Brisbane advertises that its average delivery time is less than six hours
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for local deliveries. A random sample of the amount of time this courier takes to deliver packages to an
address across town produce the following delivery times (rounded to the nearest hour

7 3 4 6 10 5 6 4 3 8

a. Is this sufficient evidence to support the courier’s advertisement, at the 5% level of significance?
b. What assumption must be made in order to answer part (a)?
6) [5 Ed 12.54] One of the critical factors in choosing a location for a new men’s clothing store is the mean
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clothing expenditure per household in the surrounding neighborhood. A survey of 20 households reveals
that the sample mean and the sample standard deviation of annual expenditure on clothes are $387 and
$60 respectively. Can we conclude at the 5% significance level that the population mean annual
expenditure is less than $400?

7) [5 Ed 12.78] Test the following hypothesis, with α = 0.10:

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H : p = 0.05
0

HA: p < 0.05

𝑝̂ = 0.01, n = 100

8) [5 Ed 12.98] A manufacturer of computer chips claims that at least 90% of his products conforms to
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specifications. In a random sample of 1000 chips drawn from a large population run, 125 were defective.
Do the data provide sufficient evidence at the 1% significance to conclude that the manufacturer’s claim is
false? What is the p-value of this test?

9) Define following terms:

a. Type I and type II error.
b. Null and alternative hypothesis
c. Confidence level and significance level
d. Rejection region and non rejection region
e. Critical value and observed value.

MC
1. Consider the following null and alternative hypotheses.
Ho: x = 352 Ha: x > 352
These hypotheses _______________.

A. invalid, because are not mutually exclusive

B. invalid, because are not collectively exhaustive
C. invalid, because it does not reference a population parameter
D. are established correctly

2. If, in testing hypotheses, the researcher uses a method in which the probability of the calculated
statistic is compared to alpha to reach a decision, the researcher is using the _______.
A. probability method B. critical value method
C. z-value method D. statistical method

3. A researcher is testing a hypothesis of a single mean. The critical z-value for  = .05 and a one-tailed
test is 1.645. The observed z-value from sample data is 1.13. The decision made by the researcher based
on this information is to ______ the null hypothesis.
A. reject B. not reject
C. redefine D. change the alternate hypothesis into
 Additional self -study questions from past years final exam.

A. Air Pacific conducted a customer satisfaction survey after introducing new Airbus airplane. On
the basis of these surveys, the management claims that more that 75% of its customers rate
new airplane as excellent. Consumer council wants to examine Air pacific management claim by
asking 460 random customers. 322 out of 460 rated new airplane as excellent in consumer
council survey. Can consumer council support the management claim? Use Alpha =0.05 (show
all step by step procedure) [7 m]
B. Past experience indicates that a monthly long-distance telephone bill is normally distributed
with a mean of $17.82 and a standard deviation of $3.39. An advertising campaign aimed at
increasing long-distance telephone usage was conducted.

i) Define the parameter of interest and state appropriate null and alternative hypothesis
to test whether the advertising campaign was successful. [2 m]
ii) The manager of the telephone company took a random sample of 25 household bills.
Using excel output below test the hypothesis stated in part (i). Use Alpha =0.05 (write
only step 6 with reason ) [2 m]

z Stat 1.89
P(Z<=z) one-tail 0.0294
z Critical one-tail 1.6449
P(Z<=z) two-tail 0.0587
z Critical two-tail 1.9600

C. A drug company is interested in the effectiveness of a new sleeping pill. A random sample of 191 people
try the new sleeping pill and the number of additional hours of sleep (compared with the nights without
any sleeping pill), X, are recorded. The sample mean of additional hours of sleep is 2.2 hours and the
sample standard deviation of X is 3 hours.

i) Define parameter for this question. [ 1 m]

ii) Test whether the new drug increases the number of hours of sleep by more than 2 hours on average. Use level
of significance 1%. [show all 6 steps, 6m]

iii) For a given hypothesis test, the p-value was 0 and level of significance was 1%. What conclusion would be
reached? Give justification for your answer.[ 1.5 m] Markand Bhatt