10- 1

Chapter

Ten

McGraw-Hill/Irwin 2005 The McGraw-Hill Companies, Inc., All Rights Reserved.

 10- 2

Chapter Ten
One-Sample Tests of Hypothesis
GOALS
When you have completed this chapter, you will be able to:

ONE
Define a hypothesis and hypothesis testing.
TWO
Describe the five step hypothesis testing procedure.
THREE
Distinguish between a one-tailed and a two-tailed test of
hypothesis.
FOUR
Conduct a test of hypothesis about a population mean.
 10- 3

Chapter Ten continued

One-Sample Tests of Hypothesis
GOALS
When you have completed this chapter, you will be able to:

FIVE
Conduct a test of hypothesis about a population proportion.
SIX
Define Type I and Type II errors.
SEVEN
Compute the probability of a Type II error.
 10- 4

A statement
What is a
about the
Hypothesis?
value of a
population
parameter
developed for
the purpose of
testing.

Twenty percent of all

The mean monthly customers at Bovines Chop
income for systems House return for another
analysts is $6,325. meal within a month.
What is a Hypothesis?
 10- 5

Hypothesis testing

Used to determine
Based on whether the hypothesis is
sample a reasonable statement
evidence and and should not be
probability rejected, or is
theory unreasonable and should
be rejected

What is Hypothesis Testing?

 10- 6

Step 1: State null and alternate hypotheses

Step 2: Select a level of significance

Step 3: Identify the test statistic

Step 4: Formulate a decision rule

Step 5: Take a sample, arrive at a decision

Do not reject null Reject null and accept alternate

Hypothesis Testing
 10- 7

Step One: State the null and alternate hypotheses

Null Hypothesis H0
A statement about the
value of a population
parameter
Alternative Hypothesis H1:
A statement that is
accepted if the sample data
provide evidence that the
null hypothesis is false
 10- 8

Step One: State the null and alternate

hypotheses
H 0: m = 0
H 1: m = 0
Three The null
possibilities hypothesis
regarding H 0: m < 0 always contains
means H1: m > 0 equality.

H0: m > 0
H1: m < 0 3 hypotheses about means
 10- 9

Type I Error
Rejecting the null
Level of Significance hypothesis when it
is actually true (a).
The probability of
rejecting the null
hypothesis when it is Type II Error
actually true; the level of Accepting the null
risk in so doing. hypothesis when it
is actually false (b).

Step Two: Select a Level of

Significance.
 10- 10

Step Two: Select a Level of Significance.

Researcher
Null Accepts Rejects
Hypothesis Ho Ho
Correct Type I
Ho is true decision error
(a)
Type II Correct
Ho is false Error decision
(b) Risk
table
 10- 11

Test statistic z Distribution as a

test statistic

A value, determined X m
from sample z
information, used to / n
determine whether The z value is based on the
or not to reject the sampling distribution of X,
null hypothesis. which is normally
distributed when the sample
Examples: z, t, F, c2 is reasonably large (recall
Central Limit Theorem).
Step Three: Select the test statistic.
 10- 12

Step Four: Formulate the decision rule.

Critical value: The dividing point between the region
where the null hypothesis is rejected and the region
where it is not rejected.

Sampling Distribution
Region of
Of the Statistic z, a Do not
rejection
Right-Tailed Test, .05 reject
[Probability=.05]
[Probability =.95]
Level of Significance

0 1.65
Critical value
 10- 13

Decision Rule

Reject the null Computed -z < Critical -z

hypothesis and
or
accept the
alternate Computed z > Critical z
hypothesis if

Decision Rule
 10- 14

The probability, assuming that the null

p-Value hypothesis is true, of finding a value of
the test statistic at least as extreme as the
computed value for the test

Decision Rule
If the p-Value is larger If the p-Value is
than or equal to the smaller than the
significance level, a, H0 significance level, a,
is not rejected. H0 is rejected.
Calculated from the
probability distribution
function or by computer Using the p-Value in Hypothesis
Testing
 10- 15

Interpreting p-values

>.05 p .10
SOME evidence Ho is not true

>.01 p .05 >.001 p .01

STRONG evidence VERY STRONG

Ho is not true evidence Ho is not true
 10- 16

Step Five: Make a decision.

Movie
 10- 17

One-Tailed Tests of Significance

The H1: The mean yearly
alternate commissions earned by
hypothesis, full-time realtors is more
H1, states a than $35,000. (>$35,000)
direction
H1: The mean H1: Less than 20
speed of trucks percent of the
traveling on I- customers pay
95 in Georgia cash for their
is less than 60 gasoline purchase.
miles per hour. (p<.20)
(<60) One-Tailed Tests of Significance
 10- 18

Sampling Distribution Region of

Do not
Of the Statistic z, a
rejection
Right-Tailed Test, .05 reject
[Probability =.95] [Probability=.05]
Level of Significance

0 1.65
Critical value

One-Tailed Test of Significance

.
 10- 19

Two-Tailed Tests of Significance

No direction is specified in the alternate hypothesis H1.

H1: The mean

H1: The mean
price for a
amount spent by
gallon of
customers at the
gasoline is not
Wal-mart in
equal to $1.54.
Georgetown is
not equal to $25. ( ne $1.54).
( ne $25). Two-Tailed Tests of Significance
 10- 20

Two-Tailed Tests of Significance

Regions of
Nonrejection Region of Region of
Do not
and Rejection rejection rejection
reject
for a Two- [Probability=.025] [Probability=.025]
[Probability =.95]
Tailed Test,
.05 Level of
Significance

-1.96 0 1.96
Critical value Critical value
 10- 21

Test for the population

mean from a large sample
with population standard
deviation known

X m
z
/ n
Testing for the Population Mean: Large
Sample, Population Standard Deviation
Known
 10- 22

The processors of Fries Catsup

indicate on the label that the
bottle contains 16 ounces of
catsup. The standard deviation
of the process is 0.5 ounces. A
sample of 36 bottles from last
hours production revealed a
mean weight of 16.12 ounces per
bottle. At the .05 significance
level is the process out of
control? That is, can we
conclude that the mean amount
per bottle is different from 16
ounces? Example 1
 10- 23

Step 4
Step 5 State the decision rule.
Make a decision and Reject H0 if z > 1.96
interpret the results. or z < -1.96
or if p < .05.

Step 3
Identify the test statistic. Because
we know the population standard
deviation, the test statistic is z.
Step 1 Step 2
State the null and the Select the significance level.
alternative hypotheses
The significance level is .05.
H0: m = 16
H1: m 16 EXAMPLE 1
 10- 24

Step 5: Make a
decision and
interpret the results.

The p(z > 1.44)

X m 16 .12 16 .00
z 1.44 is .1499 for a
n 0.5 36 two-tailed test.
oComputed z of 1.44 We cannot
< Critical z of 1.96, conclude the
op of .1499 > a of .05, mean is different
Do not reject the null from 16 ounces.
hypothesis.
Example 1
 10- 25

Testing for the

Population Mean: As long as the
Large Sample, sample size n > 30, z
Population Standard can be approximated
Deviation Unknown using

X m
Here is unknown,
so we estimate it
z
with the sample s/ n
standard deviation s.

Testing for the Population Mean: Large Sample,

Population Standard Deviation Unknown

Roders Discount Store
chain issues its own
credit card. Lisa, the
credit manager, wants to
find out if the mean
monthly unpaid balance
is more than $400. The
level of significance is set
at .05. A random check
of 172 unpaid balances
revealed the sample
mean to be $407 and the
sample standard
deviation to be $38.
10- 26
Should Lisa conclude
that the population
mean is greater than
$400, or is it reasonable
to assume that the
difference of $7 ($407-
$400) is due to chance?
Example 2
 10- 27

Step 5 Step 4
Make a decision H0 is rejected if
and interpret the z > 1.65
results. or if p < .05.
Step 3
Because the sample is large
we can use the z
distribution as the test
statistic.
Step 1 Step 2
H0: < $400 The significance
H1: > $400 level is .05.
Example 2
 10- 28
Step 5
Make a decision X m $407 $400
and interpret the z 2.42
s n $38 172
results.

oComputed z of 2.42 The p(z > 2.42) is

> Critical z of 1.65, .0078 for a one-
tailed test.
op of .0078 < a of .05.

Reject H0.

Lisa can conclude that

the mean unpaid balance
is greater than $400.
 10- 29

Testing for a
Population Mean: The test statistic
Small Sample, is the t
Population distribution.
Standard Deviation
Unknown X m
t
s/ n

The critical value of t is

determined by its degrees of
freedom equal to n-1.
Testing for a Population Mean: Small Sample,
Population Standard Deviation Unknown
The current rate for producing 10- 30

5 amp fuses at Neary Electric

Co. is 250 per hour. A new
machine has been purchased
and installed that, according
to the supplier, will increase
the production rate. The
production hours are normally
distributed. A sample of 10
randomly selected hours from
last month revealed that the At the .05 significance
mean hourly production on level can Neary conclude
the new machine was 256 that the new machine is
units, with a sample standard faster?
deviation of 6 per hour. Example 3
 10- 31

The null hypothesis is rejected if t > 1.833 or, using the

p-value, the null hypothesis is rejected if p < .05.

Step 4
State the decision rule.
There are 10 1 = 9 Step 3
degrees of freedom. Find a test statistic. Use
the t distribution since
Step 1 is not known and n < 30.
State the null and
alternate hypotheses.
Step 2
H0: < 250 Select the level of
H1: > 250 significance. It is .05.
 10- 32

Step 5 X m 256 250

Make a decision t 3.162
and interpret the
s n 6 10
results.
The p(t >3.162) is
.0058 for a one-
tailed test.
oComputed t of 3.162
>Critical t of 1.833 The mean number
op of .0058 < a of .05 of amps produced is
Reject Ho more than 250 per
hour.

Example 3
 10- 33

Proportion The fraction or percentage

that indicates the part of the
population or sample having
a particular trait of interest.
The sample
proportion is p
Number of successesin the sample
and p is the p
Number sampled
population
proportion.
p p
Test Statistic for z
Testing a Single p (1 p )
Population Proportion n
 10- 34

In the past, 15% of the

mail order solicitations for
a certain charity resulted in
a financial contribution. A
new solicitation letter that
has been drafted is sent to
a sample of 200 people
and 45 responded with a
contribution. At the .05
significance level can it be
concluded that the new
letter is more effective?
Example 4
 10- 35

Step 3
Find a test statistic.
The z distribution
is the test statistic.
Step 4
State the decision rule.
The null hypothesis is
rejected if z is greater
than 1.65 or if p < .05.

Step 5
Make a decision and interpret the results.

Step 1 Step 2
State the null and the Select the level of
alternate hypothesis. significance. It is .05.
H0: p < .15
Example 4
H1: p > .15
 10- 36

Step 5: Make a decision and interpret the results.

45
.15
p p
z 200 2.97
p (1 p ) .15 (1 .15 )
n 200
p( z > 2.97)
= .0015.
Because the computed z of 2.97 > critical z of
1.65, the p of .0015 < a of .05, the null
hypothesis is rejected. More than 15 percent
responding with a pledge. The new letter is
more effective.
Example 4