Statistical Inference: Hypothesis

Testing for Single Populations

9-1
 Learning
Learning Objectives
Objectives
• Understand the logic of hypothesis testing, and
know how to establish null and alternate
hypotheses.
• Understand Type I and Type II errors, and know
how to solve for Type II errors.
• Use large samples to test hypotheses about a single
population mean and about a single population
proportion.
• Test hypotheses about a single population mean
using small samples when σ is unknown and the
population is normally distributed.
• Test hypotheses about a single population
variance.
9-2
 Method
Method of Indirect Proof

X Either X or Y is true but not both Y

X X is demonstrated not to be true Y

Y is true by default Y

9-3
 Steps
Steps in
in Testing
Testing Hypotheses
Hypotheses
1. Establish hypotheses: state the null and
alternative hypotheses.
2. Determine the appropriate statistical test and
sampling distribution.
3. Specify the Type I error rate (α).
4. State the decision rule.
5. Gather sample data.
6. Calculate the value of the test statistic.
7. State the statistical conclusion.
8. Make a managerial decision.
9-4
 Null
Null and
and Alternative
Alternative Hypotheses
Hypotheses
• The Null and Alternative Hypotheses are
mutually exclusive. Only one of them can
be true.
• The Null and Alternative Hypotheses are
collectively exhaustive. They are stated to
include all possibilities. (An abbreviated
form of the null hypothesis is often used.)
• The Null Hypothesis is assumed to be true.
• The burden of proof falls on the Alternative
Hypothesis.
9-5
 Null
Null and
and Alternative
Alternative Hypotheses:
Hypotheses:
Example
Example
• A soft drink company is filling 12 oz. cans
with cola.
• The company hopes that the cans are
averaging 12 ounces.

H o: µ = 12 oz
H a: µ ≠ 12 oz

9-6
Rejection
Rejection and
and Non
Non Rejection
Rejection Regions
Regions
Rejection Region
Rejection Region

Non Rejection Region

µ=12 oz

Critical Value Critical Value

9-7
 Type
Type II and
and Type
Type II
II Errors
Errors
• Type I Error
– Rejecting a true null hypothesis
– The probability of committing a Type I error is
called α, the level of significance.

• Type II Error
– Failing to reject a false null hypothesis
– The probability of committing a Type II error is
called β.

9-8
 Decision
Decision Table
Table
for
for Hypothesis
Hypothesis Testing
Testing

Null True Null False

Fail to Correct Type II error

reject null Decision (β )

Reject null Type I error Correct Decision

(α)

9-9
Type I & II Errors Have an Inverse
Relationship
Reduce probability of one error
and the other one goes up holding
everything else unchanged.

9-10
 Factors Affecting Type II Error
• True Value of Population Parameter
– β increases when the difference between the
hypothesized parameter and its true value
decrease
• Significance Level
α
– β increases when decreases
β
• Population Standard Deviation α
– β increases when σ increases β σ
• Sample Size
– β increases when n decreases
β
n 9-11
How to Choose between Type I and
Type II Errors
• Choice Depends on the Cost of the Errors
• Choose Smaller Type I Error When the Cost
of Rejecting the Maintained Hypothesis is
High
– A criminal trial: convicting an innocent person
– The Exxon Valdez: causing an oil tanker to sink
• Choose Larger Type I Error When You Have
an Interest in Changing the Status Quo
– A decision in a startup company about a new
piece of software
– A decision about unequal pay for a covered group
9-12
 One-tailed
One-tailed and
and Two-tailed
Two-tailed Tests
Tests
• One-tailed Tests

H o: µ ≥ 12 Ho: µ ≤ 12
H a: µ < 12 Ha: µ > 12

• Two-tailed Test

Ho: µ = 12
Ha: µ ≠ 12
9-13
 One-tailed
One-tailed Tests
Tests
Ho: µ ≥ 12 Ho: µ ≤ 12
Ha: µ < 12 Ha: µ > 12

Rejection Region Rejection Region

Non Rejection Region Non Rejection Region

µ=12 oz µ=12 oz

Critical Value Critical Value

9-14
 Two-tailed
Two-tailed Tests
Tests

Ho: µ = 12 Rejection
Region
Rejection
Region

Ha: µ ≠ 12 Non Rejection Region

µ=12 oz

Critical Values

9-15
 CPA
CPA Net
Net Income
Income Example:
Example:
Two-tailed
Two-tailed Test
Test
Ho : µ = $74,914 If Z > Zc = 1.96, reject Ho.
If Z ≤ Zc = 1.96, do not reject Ho.
Ha : µ ≠ $74,914
α α X −µ 78,646 − 74 ,914
=.025 =.025 Z= = = 2.72
2 2 σ 14 ,530
Rejection n 112
Rejection Region
Region
Non Rejection Region
Z = 2 .7 2 ≥ Z c = 1 .9 6 , reject H o
Ζ=0

Zc = −196
. Zc =196
.
9-16
 CPA
CPA Net
Net Income
Income Example:
Example:
Critical
Critical Value
Value Method
Method (Part
(Part 1)
1)
Ho: µ = $74,914 Lower
σ
X = µ−Z n
Ha: µ ≠ $74,914
c c

14,530
= 74,914 − 196
.
112
α α = 72,223
=.025 =.025
2 2
Rejection Upper
Rejection Region
Region σ
Non Rejection Region X c
= µ + Zc
n
72,223 77,605 14,530
= 74,914 + 196
.
112
Zc = −196
. Ζ=0 Zc =196
. = 77,605
9-17
 CPA
CPA NetNet Income
Income Example:
Example:
Critical
Critical Value
Value Method
Method (Part
(Part 2)
2)
α α
=.025 =.025
2 2
Rejection
Rejection Region
Region
Non Rejection Region

72,223 77,605

Zc = −196
. Ζ=0 Zc =196
.

If X < 77 ,223 or X > 77 ,605, reject H o .

If 77,223 ≤ X ≤ 77 ,605, do not reject H o .

Since X = 78,646 > X c

= 77,605, reject Ho.
9-18
 Demonstration
Demonstration Problem
Problem 9.1
9.1 (Part
(Part 1)
1)

Ho : µ = 4.30
Rejection
Region
α=.05

Ha : µ < 4.30 Non Rejection Region

Zc = −1645
. 0

If Z < − 1.645, reject H 0. X − µ 4.156 − 4.30

Z= = = − 1.42
s 0.574
If Z ≥ − 1.645, do not reject H 0.
n 32

Z = − 1.42 ≥ − 1.645,
do not reject H 0 .
9-19
 Demonstration
Demonstration Problem
Problem 9.1
9.1 (Part
(Part 2)
2)

Ho: µ = 430
. Rejection
Region
α=.05

Ha: µ < 430

. Non Rejection Region

Zc = −1645
. 0
s
X c
=µ+Z
n

= 4.30 + ( − 1.645)
0.574 xc = 4133
. 4.30

32
= 4.133

If X < 4.133, reject H 0. X = 4.156 ≥ 4.133, do not reject H 0.

If X ≥ 4.133, do not reject H 0.
9-20
 Demonstration
Demonstration Problem
Problem 9.1
9.1 (Part
(Part 3)
3)
Ho: µ = 430
. Rejection
Region
α=.05

Ha: µ < 430

. Non Rejection Region
0
If p - value < α , reject Ho.
If p - value ≥ α , do not reject Ho.

X − µ 4.156 − 4.30 Since p - value = .0778 > α = .05,

Z= = = − 1.42 do not reject Ho.
s 0.574
n 32
P ( Z < − 1.42 ) = .0778

9-21
Two-tailed
Two-tailed Test:
Test: Small
Small Sample,
Sample,
σ Unknown,
Unknown, α == .05
.05 (Part
(Part 1)
1)
Weights in Pounds of a Sample of 20 Plates
22.6 22.2 23.2 27.4 24.5
27.0 26.6 28.1 26.9 24.9
26.2 25.3 23.1 24.2 26.1
25.8 30.4 28.6 23.5 23.6

X = 2 5 .5 1 , S = 2 .1 9 3 3 , a n d n = 2 0

9-22
 Two-tailed
Two-tailed Test:
Test: Small
Small Sample,
Sample,
σ Unknown,
Unknown, α == .05
.05 (part
(part 2)
2)

Ho: µ = 25 Rejection Regions

Ha: µ ≠ 25 α
=.025
α
2
=.025
2
Non Rejection Region
df = n − 1 = 19 t = −2.093 t c
= 2.093
c

Critical Values

9-23
 Two-tailed
Two-tailed Test:
Test: Small
Small Sample,
Sample,
σ Unknown, α
σ Unknown, α == .05
.05 (part
(part 3)
3)

Rejection Regions If t > 2.093, reject Ho.

If t ≤ 2.093, do not reject Ho.

α α X − µ 2551
. − 250
.
=.025 =.025
2 t= = = 104
.
2 S 21933
.
Non Rejection Region
n 20
t c
= −2.093 t c
= 2.093

Critical Values Since t = 104

. ≤ 2.093, do not reject Ho.

9-24
Demonstration
Demonstration Problem
Problem 9.2
9.2 (Part
(Part 1)
1)
Size in Acres of 23 Farms
445 489 474 505 553 477 545
463 466 557 502 449 438 500
466 477 557 433 545 511 590
561 560

X = 498 . 78 , S = 46.94, and n = 23

9-25
Demonstration
Demonstration Problem
Problem 9.2
9.2 (Part
(Part 2)
2)

Ho : µ = 471 Rejection Region

Ha : µ > 471
α =.05

Non Rejection Region

df = n −1= 22
t =1717
c
.

Critical Value

9-26
Demonstration
Demonstration Problem
Problem 9.2
9.2 (Part
(Part 3)
3)

Rejection Region If t > 1717

. , reject Ho.
If t ≤ 1717
. , do not reject Ho.

α =.05 X − µ 498.78 − 471

t= = = 2.84
S 46.94
Non Rejection Region n 23

t =1717
c
.

Critical Value
Since t = 2.84 > 1.717, reject Ho.

9-27
Z
Z Test
Test of
of Population
Population Proportion
Proportion

p − P n ⋅ P ≥ 5, and
Z=
P⋅Q n ⋅Q ≥ 5
n
where: p = sample proportion
P = population proportion
Q = 1-P

9-28
 Testing
Testing Hypotheses about a
Proportion:
Proportion: Manufacturer
Manufacturer Example
Example
(Part
(Part 1)
1)
Rejection Regions

Ho : P = .08 α
=.05
α
=.05
2 2
Ha : P ≠ .08 Z c
= −1.645
Non Rejection Region
Z =1645
c
.

Critical Values

9-29
 Testing
Testing Hypotheses about a
Proportion:
Proportion: Manufacturer
Manufacturer Example
Example
(Part
(Part 2)
2)
Rejection Regions If Z > 1645
. , reject Ho.
If Z ≤ 1645
. , do not reject Ho.

33
α α p = =.165
=.05 =.05 200
2 2
Non Rejection Region p − P .165−.08
= −1.645 Z =1645 Z= = = 4.43
Z c c
.
P⋅ Q (.08)(.92)
Critical Values n 200

Since Z = 4.43 > 1645

. , reject Ho.

9-30
Demonstration
Demonstration Problem
Problem 9.3
9.3 (Part
(Part 1)
1)

H o: P = .17 Rejection Region

H a: P >.17 α =.05

Non Rejection Region

Z =1645
c
.

Critical Value

9-31
Demonstration
Demonstration Problem
Problem 9.3
9.3 (Part
(Part 2)
2)
If Z > 1645
. , reject Ho.
Rejection Region If Z ≤ 1645
. , do not reject Ho.

115
α =.05 p = =.209
550
p − P .209−.17
Non Rejection Region Z= = = 2.44
P⋅ Q (.17)(.83)
Z =1645
c
.
n 550
Critical Value
Since Z = 2.44 > 1645
. , reject Ho.

9-32
 Hypothesis Test for σ
Hypothesis Test for σ2:
2:

Demonstration
Demonstration Problem
Problem 9.4
9.4 (Part
(Part 1)
1)

Ho:σ = 25
2 df = 15

Ha:σ ≠ 25
2 .05

.95

.05
0

7.26094 24.9958

9-33
 Hypothesis Test for σ
Hypothesis Test for σ2:
2:
Demonstration
Demonstration Problem
Problem 9.4
9.4 (Part
(Part 2)
2)
χ χ
2 2
df = 15 If < 7.26094 or > 24.9958, reject Ho.

If 7.26094 ≤ χ ≤ 24.9958, do not reject Ho.

2

.05
.95 ( n − 1) S 2 (1 5 )( 2 8 .1)
χ
2
= = = 1 6 .8 6
σ
2
25
.05

χ = 1686
. ≤χ
0 2 2

7.26094 24.9958
Since .05,15
= 249958
. ,
do not reject Ho.

9-34
 Solving
Solving for
for Type
Type II
II Errors:
Errors:
The
The Beverage
Beverage Example
Example

Ho: µ = 12 X = µ + Zc
σ
c
n
Ha: µ < 12 = 12 + ( −1645
. )
010
.
60
Rejection = 11979
.
Region
α=.05
If X < 11979
. , reject Ho.
Non Rejection Region
Ζ=0 If X ≥ 11979
. , do not reject Ho.
Zc = −1645
.

9-35
p-Value Approach to Testing
• Convert Sample Statistic (e.g., X ) to Test
Statistic (e.g., Z, t or F –statistic)
• Obtain the p-value from a table or computer
– p-value: probability of obtaining a test statistic as
extreme or more extreme ( ≤ or ≥ ) than the
observed sample value given H0 is true
– Called observed level of significance
– Smallest value of α that an H0 can be rejected
• Compare the p-value with α
– If p-value ≥ α , do not reject H0
– If p-value < α , reject H0
9-36
 Example Solution: Two-Tail Test

H0: µ = 368 Test Statistic:

H1: µ ≠ 368
X −µ 372.5 − 368
α = 0.05 Z= = = 1.50
n = 25 σ 15
n 25
Critical Value: ±1.96
Decision:
Reject
Do Not Reject at α = .05.
.025 .025
Conclusion:
Insufficient Evidence that
-1.96 0 1.96 Z True Mean is Not 368.9-37
1.50
 p-Value Solution

(p-Value = 0.1336) ≥ (α = 0.05)

Do Not Reject.
p-Value = 2 x 0.0668

Reject Reject

α = 0.05

0 1.50 1.96
Z
Test Statistic 1.50 is in the Do Not Reject Region
9-38
Type
Type II
II Error
Error for
for Beverage
Beverage Example
Example
with µ =11.99
with =11.99 oz
oz
Reject Ho Do Not Reject Ho
Type I Correct
Error Decision
95%
α=.05
Ho is True
−1.645 0 Z0

Ho is False

Correct β=.8023 Type II

Decision 19.77% Error
Z1
−0.85 0

11.979 11.99 12 9-39

X
Type
Type II
II Error
Error for
for Demonstration
Demonstration
Problem
Problem 9.5, with µ=11.96
9.5, with µ=11.96 oz
oz
Reject Ho Do Not Reject Ho
Type I Correct
Error 95% Decision
α=.05
Ho is True −1.645 Z0
0

Ho is False
Correct β=.0708 Type II
Decision 92.92% Error

Z1
0

11.96 11.979 12
X
9-40
ββ Values
Values and
and Power
Power Values
Values
for
for the
the Soft-Drink
Soft-Drink Example
Example

µ β Power

11.999 .94 .06

11.995 .89 .11
11.990 .80 .20
11.980 .53 .47
11.970 .24 .76
11.960 .07 .93
11.950 .01 .99

9-41
Operating
Operating Characteristic
Characteristic Curve
Curve
for
for the
the Soft-Drink
Soft-Drink Example
Example
1
0.9
0.8
0.7
0.6
Probability

0.5
0.4
0.3
0.2
0.1
0
11.95 11.96 11.97 11.98 11.99 12
µ

9-42
 Power
Power Curve
Curve
for
for the
the Soft-Drink
Soft-Drink Example
Example
1
0.9
0.8
0.7
Probability

0.6
0.5
0.4
0.3
0.2
0.1
0
11.95 11.96 11.97 11.98 11.99 12
µ

9-43