Introduction to Hypothesis Testing:

One Population Value

Chapter 8 Handout


Chapter 8 Summary
Hypothesis Testing for One Population Value:
1. Population Mean ()
a. o (population standard deviation) is given (known):
Use z/standard normal/bell shaped distribution
b. o (pop std dev) is not given but s (sample std dev) is
given
Use students t distribution
2. Population proportion (t)
Use z/standard normal/bell shaped distribution
3. Population variance (o
2
)
Use X
2
(Chi-Square) distribution
PS: population standard deviation = o





A hypothesis is an
assumption about the
population parameter.
A parameter is a
Population mean or
proportion
The parameter must be
identified before
analysis.
I assume the mean GPA
of this class is 3.5!
1984-1994 T/Maker Co.
What is a Hypothesis?

States the Assumption (numerical) to be tested
e.g. The average # TV sets in US homes is at
least 3 (H
0
: > 3)
Begin with the assumption that the null
hypothesis is TRUE.
(Similar to the notion of innocent until proven guilty)
The Null Hypothesis, H
0
Refers to the Status Quo
Always contains the = sign
The Null Hypothesis may or may not be rejected.


Is the opposite of the null hypothesis
e.g. The average # TV sets in US homes is
less than 3 (H
1
: < 3)
Challenges the Status Quo
Never contains the = sign
The Alternative Hypothesis may or may
not be accepted
The Alternative Hypothesis, H
1
or H
A

Steps:
State the Null Hypothesis (H
0
: > 3)
State its opposite, the Alternative
Hypothesis (H
1
: < 3)
Hypotheses are mutually exclusive &
exhaustive
Sometimes it is easier to form the
alternative hypothesis first.
Identify the Problem

Population
Assume the
population
mean age is 50.
(Null Hypothesis)
REJECT
The Sample
Mean Is 20
Sample
Null Hypothesis
50? 20 = ~ = X Is
Hypothesis Testing Process
No, not likely!

Sample Mean = 50
Sampling Distribution
It is unlikely
that we would
get a sample
mean of this
value ...
... if in fact this were
the population mean.
... Therefore, we
reject the null
hypothesis that
= 50.
20
H
0
Reason for Rejecting H
0


Defines Unlikely Values of Sample
Statistic if Null Hypothesis Is True
Called Rejection Region of Sampling
Distribution
Designated o (alpha)
Typical values are 0.01, 0.05, 0.10
Selected by the Researcher at the Start
Provides the Critical Value(s) of the Test
Level of Significance,

Level of Significance, and
the Rejection Region
H
0
: > 3
H
1
: < 3
0
0
0
H
0
: s 3
H
1
: > 3
H
0
: = 3
H
1
: = 3
o
o
o/2

Critical
Value(s)
Rejection
Regions

Type I Error
Reject True Null Hypothesis
Has Serious Consequences
Probability of Type I Error Is o
Called Level of Significance
Type II Error
Do Not Reject False Null Hypothesis
Probability of Type II Error Is | (Beta)
Errors in Making Decisions

H
0
: Innocent
Jury Trial
Hypothesis Test
Actual Situation Actual Situation
Verdict Innocent Guilty Decision H
0
True H
0
False
Innocent Correct Error
Do Not
Reject
H
0
1 - o
Type II
Error ( | )
Guilty
Error
Correct
Reject
H
0
Type I
Error
(
o
)
Power
(1 - | )
Result Possibilities

o
|
Reduce probability of one error
and the other one goes up.
& Have an
Inverse Relationship

True Value of Population Parameter
Increases When Difference Between Hypothesized
Parameter & True Value Decreases
Significance Level o
Increases When o Decreases
Population Standard Deviation o

Increases When o

Increases
Sample Size n
Increases When n Decreases
Factors Affecting
Type II Error,
o
|
|
o
|
n

3 Methods for Hypotheses Tests
Refer to Figure 8-6 (page 299) for a hypothesis test for
means () with o (pop. std. dev.) is given:
Method 1: Comparing X
o
(X critical) with X
Method 2: Z test, i.e., comparing Z
o
(Z critical) with Z (or
Z statistics or Z calculated)
Method 3: Comparing o (significance level) with p-value
You can modify those three methods for other cases.
For example, if o is unknown, you must use
students t distribution. If you would like to use
Method 2, please compare t
o
(t critical) with t (or t
statistics or t calculated). Refer to Figure 8-8 (page
303).




You always get:
Z
o
(Z critical) from Z distribution
t
o
(t critical) from students t distribution
.X
2
o
(X
2
critical) from X
2
distribution
You always get:
Z or Z calculated or Z statistics from sample
(page 299 and Figure 8-6)
t or t calculated or t statistics from sample
(Figure 8-8, page 299)
.X
2
or X
2
calculated or X
2
statistics from
sample (Figure 8-19, page 322)







Convert Sample Statistic (e.g., ) to
Standardized Z Variable
Compare to Critical Z Value(s)
If Z test Statistic falls in Critical Region,
Reject H
0
; Otherwise Do Not Reject H
0
Z-Test Statistics ( Known)
Test Statistic
X
n
X X
Z
X
X
o

o

=

=

Probability of Obtaining a Test Statistic
More Extreme (s or >) than Actual
Sample Value Given H
0
Is True
Called Observed Level of Significance
Smallest Value of a H
0
Can Be Rejected
Used to Make Rejection Decision
If p value > o, Do Not Reject H
0

If p value < o, Reject H
0
p Value Test

1. State H
0
H
0
:

> 3
2. State H
1
H
1
: < 3

3. Choose o o = .05
4. Choose n n = 100
5. Choose Method: Z Test (Method 2)
Hypothesis Testing: Steps
Test the Assumption that the true mean #
of TV sets in US homes is at least 3.

6. Set Up Critical Value(s) Z = -1.645
7. Collect Data 100 households surveyed
8. Compute Test Statistic Computed Test Stat.= -2
9. Make Statistical Decision Reject Null Hypothesis
10. Express Decision The true mean #of TV set
is less than 3 in the US
households.

Hypothesis Testing: Steps
Test the Assumption that the average # of
TV sets in US homes is at least 3.
(continued)

Assumptions
Population Is Normally Distributed
If Not Normal, use large samples
Null Hypothesis Has =, s, or > Sign Only
Z Test Statistic:
One-Tail Z Test for Mean
( Known)
n
x x
z
x
x
o

o

=

=

Z
0
o
Reject H
0
Z
0
Reject H
0
o
H
0
: > 0
H
1
: < 0
H
0
: s 0
H
1
: > 0
Must Be Significantly
Below = 0
Small values dont contradict H
0
Dont Reject H
0
!
Rejection Region

Does an average box of
cereal contain more than
368 grams of cereal? A
random sample of 25 boxes
showed X = 372.5. The
company has specified o to
be 15 grams. Test at the
o=0.05 level.
368 gm.
Example: One Tail Test
H
0
: s 368
H
1
: > 368
_

Z .04 .06
1.6 .4495 .4505 .4515
1.7 .4591 .4599 .4608
1.8 .4671 .4678 .4686
.4738 .4750
Z 0
o
Z
= 1
1.645
.50
-.05
.45
.05
1.9 .4744
Standardized Normal
Probability Table (Portion)
What Is Z Given o = 0.05?
o = .05
Finding Critical Values:
One Tail
Critical Value
= 1.645

o = 0.025
n = 25
Critical Value: 1.645

Test Statistic:
Decision:

Conclusion:

Do Not Reject Ho at o = .05
No Evidence True Mean
Is More than 368
Z 0
1.645
.05
Reject
Example Solution: One Tail
H
0
: s 368
H
1
: > 368
50 . 1 =

=
n
X
Z
o

Z 0
1.50
p Value
.0668
Z Value of Sample
Statistic
From Z Table:
Lookup 1.50
.9332
Use the
alternative
hypothesis
to find the
direction of
the test.
1.0000
- .9332
.0668
p Value is P(Z > 1.50) = 0.0668
p Value Solution

0
1.50
Z
Reject
(p Value = 0.0668) > (o = 0.05).
Do Not Reject.
p Value = 0.0668
o = 0.05
Test Statistic Is In the Do Not Reject Region
p Value Solution

Does an average box of
cereal contains 368 grams of
cereal? A random sample of
25 boxes showed X = 372.5.
The company has specified
o to be 15 grams. Test at the
o=0.05 level.
368 gm.
Example: Two Tail Test
H
0
: = 368
H
1
: = 368

o = 0.05
n = 25
Critical Value: 1.96

Test Statistic:
Decision:

Conclusion:

Do Not Reject Ho at o = .05
No Evidence that True
Mean Is Not 368
Z
0
1.96
.025
Reject
Example Solution: Two Tail
-1.96
.025
H
0
: = 386
H
1
: = 386
50 . 1
25
15
368 5 . 372
=

=
n
X
Z
o

Two tail hypotheses tests =
Confidence Intervals
For X = 372.5oz, o = 15 and n = 25,
The 95% Confidence Interval is:
372.5 - (1.96) 15/ 25 to 372.5 + (1.96) 15/ 25
or
366.62 s s 378.38
If this interval contains the Hypothesized mean (368), we
do not reject the null hypothesis. It does. Do not reject Ho.
_

Assumptions
Population is normally distributed
If not normal, only slightly skewed & a large
sample taken
Parametric test procedure
t test statistic
t-Test: Unknown
n
S
X
t

=

Example: One Tail t-Test
Does an average box of cereal
contain more than 368 grams
of cereal? A random sample of
36 boxes showed X = 372.5,
and s= 15. Test at the o=0.01
level.
368 gm.
H
0
: s 368
H
1
: > 368
o is not given,

o = 0.01
n = 36, df = 35
Critical Value: 2.4377

Test Statistic:
Decision:

Conclusion:

Do Not Reject Ho at o = .01
No Evidence that True
Mean Is More than 368
Z
0
2.4377
.01
Reject
Example Solution: One Tail
H
0
: s 368
H
1
: > 368
80 . 1
36
15
368 5 . 372
=

=
n
S
X
t

Involves categorical variables
Fraction or % of population in a category
If two categorical outcomes, binomial
distribution
Either possesses or doesnt possess the characteristic
Sample proportion (p)
Proportions
size sample
successes of number
n
X
p = =

Example:Z Test for Proportion
Problem: A marketing company claims
that it receives t = 4% responses from its
Mailing.
Approach: To test this claim, a random
sample of n = 500 were surveyed with x =
25 responses.
Solution: Test at the o = .05 significance
level.


o = .05
n = 500, x = 25
p = x/n = 25/500 = 0.05
Do not reject Ho at o = .05
Z Test for Proportion:
Solution
H
0
: t = .04
H
1
: t = .04
Critical Values: 1.96
Test Statistic:
Decision:
Conclusion:
We do not have sufficient
evidence to reject the companys
claim of 4% response rate.
Z ~
p-t
t(1 - t )
n
=
.05-.04
.04 (1 - .04)
500
= 1.14
Z 0
Reject Reject
.025 .025