Business Statistics, 5

th
ed.
by Ken Black


Chapter 10

Statistical
Inferences about
Two Populations
Discrete Distributions
PowerPoint presentations prepared by Lloyd Jaisingh,
Morehead State University

Learning Objectives
Test hypotheses and construct confidence
intervals about the difference in two
population means using the Z statistic.
Test hypotheses and construct confidence
intervals about the difference in two
population means using the t statistic.
Learning Objectives
Test hypotheses and construct confidence
intervals about the difference in two
related populations.
Test hypotheses and construct confidence
intervals about the differences in two
population proportions.
Test hypotheses and construct confidence
intervals about two population variances.

Sampling Distribution of the
Difference Between Two Sample
Means
n
x
x
1
1

=
Population 1
Population 2
n
x
x
2
2

=
1
X
2
X
1
x
2
x
2 1
x x
2 1
x x
Sampling Distribution of the
Difference between Two Sample
Means
1 2 X X

1 2 X X

1 2
1
2
1
2
2
2
X X
n n

= +
o
o o
1 2
1 2
X X

=

2 1
2 1
=
x x
2
2
2
1
2
1
2 1
n n
x x
o o
o + =

2 1
x x
2 1
x x

Z Formula for the Difference
in Two Sample Means
( ) ( )
n n
x x
z
2
2
2
1
2
1
2 1
2 1
o o

+

=
When o
1
2
ando
2
2
are known and
Independent Samples
Hypothesis Testing for Differences
Between Means: The Wage Example
Advertising Managers
74.256 57.791 71.115
96.234 65.145 67.574
89.807 96.767 59.621
93.261 77.242 62.483
103.030 67.056 69.319
74.195 64.276 35.394
75.932 74.194 86.741
80.742 65.360 57.351
39.672 73.904
45.652 54.270
93.083 59.045
63.384 68.508
164 . 264
253 . 16
700 . 70
32
2
1
1
1
1
=
=
=
=
o
o
x
n
411 . 166
900 . 12
187 . 62
34
2
2
2
2
2
=
=
=
=
o
o
x
n
Auditing Managers
69.962 77.136 43.649
55.052 66.035 63.369
57.828 54.335 59.676
63.362 42.494 54.449
37.194 83.849 46.394
99.198 67.160 71.804
61.254 37.386 72.401
73.065 59.505 56.470
48.036 72.790 67.814
60.053 71.351 71.492
66.359 58.653
61.261 63.508
Hypothesis Testing for Differences
Between Means: The Wage Example
2 1
2 1
:
:
0


=
=
a
H
H
o =0.05, o/2 = 0.025, z
0.025
= 1.96
Hypothesis Testing for Differences
Between Means: The Wage Example
35 . 2
34
411 . 166
32
160 . 264
) 0 ( ) 187 . 62 700 . 70 (
=
+

= z
Since the observed value of 2.35 is greater than 1.96,
reject the null hypothesis. That is, there is a significant
difference between the average annual wage of advertising
managers and the average annual wage of an auditing manager.
Difference Between Means: Using Excel
z-Test: Two Sample for Means
Adv Mgr Auditing Mgr
Mean 70.7001 62.187
Known Variance 264.164 166.411
Observations 32 34
Hypothesized Mean Difference 0
z 2.35
P(Z<=z) one-tail 0.0094
z Critical one-tail 1.64
P(Z<=z) two-tail 0.0189
z Critical two-tail 1.960
Confidence Interval to Estimate
1
-
2
When
o
1
, o
2
are known
( ) ( )
n n
z
x x
n n
z
x x
2
2
2
1
2
1
2 1
2 1
2
2
2
1
2
1
2 1
o o

o o
+ + s s +
Demonstration Problem 10.2
( ) ( )
( ) ( )
88 . 1 42 . 4
50
99 . 2
2
50
46 . 3
96 . 1 6 . 24 45 . 21
50 50
96 . 1 6 . 24 45 . 21
2 1
2
2 1
2 2
2
2
2
1
2
1
2 1
2 1
2
2
2
1
2
1
2 1
99 . 2 46 . 3
s s
+ + s s +
+ + s s +


o o

o o
n n
x x
n n
x x
z z
46 . 3
45 . 21
50
1
1
1
=
=
=
o
x
n
Regular
99 . 2
6 . 24
50
2
2
2
=
=
=
o
x
n
Premium
1.96 = Confidence % 95 z
The t Test for Differences
in Population Means
Each of the two populations is normally
distributed.
The two samples are independent.
The values of the population variances are
unknown.
The variances of the two populations are equal.
o
1
2
= o
2
2
t Formula to Test the Difference in
Means Assuming o
1
2
= o
2
2
2 1 2 1
2
2
2 1
2
1
2 1 2 1
1 1
2
) 1 ( ) 1 (
) ( ) (
n n n n
n s n s
x x
t
+
+
+

=

Hernandez Manufacturing Company
Training Method A
56 51 45
47 52 43
42 53 52
50 42 48
47 44 44
Training Method B
59
52
53
54
57
56
55
64
53
65
53
57
495 . 19
73 . 47
15
2
1
1
1
=
=
=
s
x
n
273 . 18
5 . 56
12
2
2
2
2
=
=
=
s
x
n
Hernandez Manufacturing Company
(part 3)
. H t o reject -2.060, < -5.20 = Since
( )
( )( ) ( )( )
20 . 5
12
1
15
1
2 12 15
11 273 . 18 14 495 . 19
0 50 . 56 73 . 47
1 1
2
) 1 ( ) 1 (
) ( ) (
2 1 2 1
2
2
2 1
2
1
2 1 2 1
=
+
+
+

=
+
+
+

=
n n n n
n s n s
x x
t

. H t
. H t t
o
o
reject not do 2.060, 2.060 - If
reject 2.060, > or 2.060 - < If
s s
MINITAB Output for Hernandez
New-Employee Training Problem
Twosample T for method A vs. method B

N Mean StDev SE Mean
method A 15 47.73 4.42 1.1
method B 12 56.60 4.27 1.2

95% C.I. for mu method A - mu method B: (-12.2, -5.3)

T-Test mu method A = mu method B (vs not =): T = -5.20
P = 0.0000 DF = 25
Both use Pooled StDev = 4.35
EXCEL Output for Hernandez
New-Employee Training Problem
t-Test: Two-Sample Assuming Equal Variances
Variable 1 Variable 2
Mean 4 7.73 56.5
Variance 19.495 18.27
Observations 15 12
Pooled Variance 18.957
Hypothesized Mean Difference 0
df 25
t Stat - 5.20
P(T<=t) one-tail 1.12E-05
t Critical one-tail 1.71
P(T<=t) two-tail 2.23E-05
t Critical two-tail 2.06
Confidence Interval to Estimate
1
-

2
when o
1
2
and

o
2
2
are unknown and
o
1
2
= o
2
2
2 where
1 1
2
) 1 ( ) 1 (
) (
2 1
2 1 2 1
2
2
2 1
2
1
2 1
+ =
+
+
+

n n df
n n n n
n s n s
t x x
Demonstration Problem 10.4

056 . 2 , 05 . 0
42 . 1 , 20 . 1
84 . 6 , 35 . 4
15 , 13
26 , 025 . 0
2 1
2 1
2 1
= =
= =
= =
= =
t
s s
x x
n n
o
Demonstration Problem 10.4

46 . 1 - 52 . 3
03 . 1 49 . 2
15
1
13
1
2 15 13
) 14 ( ) 42 . 1 ( ) 12 ( ) 20 . 1 (
056 . 2 ) 84 . 6 35 . 4 (
2 1
2 2
s s

+
+
+


The researcher is 95% confident that the difference in population
average daily consumption of cups of coffee between regular- and
decaffeinated-coffee drinkers is between 1.46 cups and 3.52 cups.
Dependent Samples
Before and after
measurements on
the same
individual
Studies of twins
Studies of spouses
Individual
1
2
3
4
5
6
7
Before
32
11
21
17
30
38
14
After
39
15
35
13
41
39
22
Formulas for Dependent Samples
difference sample mean =
difference sample of deviation standard =
difference population mean =
pairs in difference sample =
pairs of number
1
d
s
D
d
n
n df
n
s
D d
t
t
d
=
=

=
1
) (
1
) (
2
2
2

=
=

n
n
d
d
n
d d
s
n
d
d
d
P/E Ratios for Nine Randomly Selected
Companies
Company Year1 P/E Ratio Year2 P/E Ratio
1 8.9 12.7
2 38.1 45.4
3 43.0 10.0
4 34.0 27.2
5 34.5 22.8
6 15.2 24.1
7 20.3 32.3
8 19.9 40.1
9 61.9 106.5
Hypothesis Testing with Dependent
Samples: P/E Ratios for Nine Companies
Company
Year1 P/E
Ratio
Year2 P/E
Ratio d
1 8.9 12.7 -3.8
2 38.1 45.4 -7.3
3 43.0 10.0 33.0
4 34.0 27.2 6.8
5 34.5 22.8 11.7
6 15.2 24.1 -8.9
7 20.3 32.3 -12.0
8 19.9 40.1 -20.2
9 61.9 106.5 -44.6
Hypothesis Testing with Dependent
Samples: P/E Ratios for Nine Companies
70 . 0
9
599 . 21
0 033 . 5
599 . 21
033 . 5
=

=
=
=
t
s
d
d
o H reject not do , 355 3 70 . 0 355 3 . t = - . - Since s s
H
0
: D = 0
H
1
: D = 0
Hypothesis Testing with Dependent
Samples: P/E Ratios for Nine Companies
t-Test: Paired Two Sample for Means

Year1 P/E
Ratio
Year2 P/E
Ratio
Mean 30.64 35.68
Variance 268.1 837.5
Observations 9 9
Pearson Correlation 0.674
Hypothesized Mean Difference 0
df 8
t Stat -0.7
P(T<=t) one-tail 0.252
t Critical one-tail 1.86
P(T<=t) two-tail 0.504
t Critical two-tail 2.306
Hypothesis Testing with Dependent
Samples: P/E Ratios for Nine Companies
MINITAB Output
Hypothesis Testing with Dependent
Samples: Demonstration Problem 10.5
Individual
1
2
3
4
5
6
7
Before
32
11
21
17
30
38
14
After
39
15
35
13
41
39
22
d
-7
-4
-14
4
-11
-1
-8
Hypothesis Testing with Dependent
Samples: Demonstration Problem 10.5
54 . 2
7
0945 . 6
0 857 . 5
0945 . 6
857 . 5
=

=
=
=
t
s
d
d
. reject 1.943, - 2.54 - =
0
H
t
t Since
c
= <
H
0
: D = 0
H
1
: D < 0
Hypothesis Testing with Dependent
Samples: Demonstration Problem
10.5 MINITAB output
Confidence Intervals
1 =

n df
n
s
t d
d


INSERT TABLE 10.8
Confidence Intervals
Confidence Intervals
16 . 1 62 . 5
23 . 2 39 . 3 23 . 2 39 . 3
18
27 . 3
898 . 2 39 . 3
18
27 . 3
898 . 2 39 . 3

s s
+ s s
+ s s
+ s s
D
D
D
n
s
t d D
n
s
t d
d d
The analyst estimates with a 99% level of confidence that the
average difference in new-house sales for a real estate company in
Indianapolis between 2005 and 2006 is between -5.62 and -1.16
houses.
Confidence Intervals-MINITAB Solution
Sampling Distribution of Differences
in Sample Proportions
n
q p
n
q p

p p
q
n
p
n
q
n
p
n
p p
p p
p q
2
2 2
1
1 1
2 1
2
2
2
2
1
1
1
1

and

with d distribute normally is s proportion sample in difference the
- 1 = where 5 4.
and , 5 3.
, 5 2.
, 5 1.
samples large For
2 1
2 1

=
=
>
>
>
>

Z Formula for the Difference

in Two Population Proportions
( ) ( )
p q
p q
p
p
n
n
p
p
n
q p
n
q p
p p p p
Z
2 2
1 1
2
1
2
1
2
1
2
2 2
1
1 1
2 1 2 1
- 1
- 1
2 population from proportion
1 population from proportion
2 sample of size
1 sample of size
2 sample from proportion
1 sample from proportion

=
=
=
=
=
=
=
=

=
Z Formula to Test the Difference
in Population Proportions
( ) ( )
( )
p q
P
q p
Z
n n
p
n
p
n
n n
x x
n n
p p p p
=
+
+
=
+
+
=
|
|
.
|

\
|
+

=
1
1 1
2 1
2
2
1
1
2 1
2 1
2 1
2 1 2 1


Testing the Difference in Population
Proportions (Demonstration Problem 10.6)
24 .
100
24
24
100

1
1
1
= =
=
=
p
x
n
41 .
95
39
39
95

2
2
2
= =
=
=
p
x
n
323 .
95 100
39 24
2 1
2 1
=
+
+
=
+
+
=
n n
x x
P
( ) ( )
( )
( ) ( )
( )( )
54 . 2
067 .
17 .
95
1
100
1
677 . 323 .
0 41 . 24 .
1 1
2 1
2 1 2 1

=

=
|
.
|

\
|
+

=
|
|
.
|

\
|
+

=
n n
p p p p
q p
z
. Ho reject not do 2.575, 2.54 - = z 2.575 - Since s s
H
0
: p
1
p
2
= 0
H
a
: p
1
p
2
= 0
Confidence Interval to Estimate p
1
- p
2
( ) ( )
n
q p
n
q p
p p p p
n
q p
n
q p
p p
z z
2
2 2
1
1 1
2 1 2 1
2
2 2
1
1 1
2 1




+ + s s +
Example Problem:
When do men shop
for groceries?
88 . 1
12 .
400
48
48
400

1 1
1
1
1
= =
= =
=
=
p q
p
x
n
61 . 1
39 .
480
187
187
480

2 2
2
2
2
= =
= =
=
=
p q
p
x
n
( ) ( )
( )
( )( ) ( )( )
( )
( )( ) ( )( )
206 . 334 .
064 . 27 . 064 . 27 .
480
61 . 39 .
400
88 . 12 .
33 . 2 39 . 12 .
480
61 . 39 .
400
88 . 12 .
33 . 2 39 . 12 .
2 1
2 1
2 1
2
2 2
1
1 1
2 1 2 1
2
2 2
1
1 1
2 1




s s
+ s s
+ + s s +
+ + s s +
p p
p p
p p
n
q p
n
q p
p p p p
n
q p
n
q p
p p
Z Z
For a 98% level of confidence
z = 2.33.
F Test for Two Population Variances
1
1
2 2
min
1 1
2
2
2
1
= =
= =
=
n df
n df
s
s
F
ator deno
numerator
u
u

Sheet Metal Example: Hypothesis Test for
Equality of Two Population Variances

o o
o o
2
2
2
1
2
2
2
1
:
:
=
=
a
o
H
H
59 . 3
11 , 9 , 025 .
= F
. H F If
. H F F If
o
o
reject do , 59 . 3 0.28
reject , 3.59 > or 0.28 <
s s
28 . 0
59 . 3
1
1
=
11 , 9 , 05 .
11 , 9 , 05 .
=
=
F
F
1
1
2 2
min
1 1
2
2
2
1
= =
= =
=
n
df
n df
s
s
F
ator deno
numerator
u
u
12
10
05 . 0
2
1
=
=
=
n
n
o
Sheet Metal Example
Machine 1
22.3 21.8 22.2
21.8 21.9 21.6
22.3 22.4
21.6 22.5
Machine 2
22.0
22.1
21.8
21.9
22.2
22.0
21.7
21.9
22.0
22.1
21.9
22.1
1138 . 0
10
2
1
1
=
=
s
n
0202 . 0
12
2
2
2
=
=
s
n
63 . 5
0202 . 0
1138 . 0
2
2
2
1
= = =
s
s
F
. H F F o
c
reject 3.59, = > 5.63 = Since
Sheet Metal Example-MINITAB Solution
Sheet Metal Example-EXCEL Solution
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