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You are on page 1of 84

BUSINESS

STATISTICS

by

AMIR D. ACZEL

&

JAYAVEL SOUNDERPANDIAN

7th edition.

Prepared by Lloyd Jaisingh, Morehead State

University

Chapter 7

Hypothesis Testing

McGraw-Hill/Irwin

7-2

7 Hypothesis Testing

Using Statistics

The Concept of Hypothesis Testing

Computing the p-value

The Hypothesis Test

Pre-Test Decisions

7-3

LEARNING OBJECTIVES

Describe the role of sampling in hypothesis testing

Identify Type I and Type II errors and how they conflict with each other

Interpret the confidence level, the significance level and the power of a test

Compute and interpret p-values

Determine the sample size and significance level for a given hypothesis test

Use templates for p-value computations

Plot power curves and operating characteristic curves using templates

7-4

A hypothesis is a statement or assertion about the state of nature (about the true

value of an unknown population parameter):

= 100

The accused is guilty

100

A hypothesis is either true or false, and you may fail to reject it or you may

reject it on the basis of information:

Sample data

7-5

Decision-Making

false:

The alternative is highly improbable

Correct

A guilty defendant may be convicted

Incorrect

7-6

nullhypothesis,

hypothesis,denoted

denotedby

byHH0,0,isisan

anassertion

assertionabout

aboutone

oneorormore

morepopulation

population

AAnull

parameters. This

Thisisisthe

theassertion

assertionwe

wehold

holdtotobe

betrue

trueuntil

untilwe

wehave

havesufficient

sufficient

parameters.

statisticalevidence

evidencetotoconclude

concludeotherwise.

otherwise.

statistical

H0: = 100

H

0: = 100

Thealternative

alternativehypothesis,

hypothesis,denoted

denotedby

byHH1,1,isisthe

theassertion

assertionofofall

allsituations

situationsnot

not

The

coveredby

bythe

thenull

nullhypothesis.

hypothesis.

covered

H1: 100

H

1: 100

andHH1are:

are:

HH00and

1

Mutually

Mutuallyexclusive

exclusive

Onlyone

onecan

canbe

betrue.

true.

Only

Exhaustive

Exhaustive

Togetherthey

theycover

coverall

allpossibilities,

possibilities,so

soone

oneor

orthe

theother

othermust

mustbe

be

Together

true.

true.

7-7

population variances are also possible. For example

H0: p 40%

H1: p < 40%

H0:

H1:

7-8

Thenull

nullhypothesis:

hypothesis:

The

Oftenrepresents

representsthe

thestatus

statusquo

quosituation

situationor

oran

anexisting

existingbelief.

belief.

Often

Is maintained, or held to be true, until a test leads to its rejection

Is maintained, or held to be true, until a test leads to its rejection

favorof

ofthe

thealternative

alternativehypothesis.

hypothesis.

ininfavor

Isaccepted

acceptedas

astrue

trueor

orrejected

rejectedas

asfalse

falseon

onthe

thebasis

basisof

ofaa

Is

considerationof

ofaatest

teststatistic.

statistic.

statistic

consideration

statistic

Testing

7-9

teststatistic

statisticisisaasample

samplestatistic

statisticcomputed

computedfrom

fromsample

sampledata.

data. The

Thevalue

valueof

of

AAtest

thetest

teststatistic

statisticisisused

usedinindetermining

determiningwhether

whetherorornot

notwe

wemay

mayreject

rejectthe

thenull

null

the

hypothesis.

hypothesis.

Thedecision

decisionrule

ruleofofaastatistical

statisticalhypothesis

hypothesistest

testisisaarule

rulethat

thatspecifies

specifiesthe

the

The

conditionsunder

underwhich

whichthe

thenull

nullhypothesis

hypothesismay

maybe

berejected.

rejected.

conditions

ConsiderHH00::=

=100

100.. We

Wemay

mayhave

haveaadecision

decisionrule

rulethat

thatsays:

says:Reject

Reject

Consider

thesample

samplemean

meanisisless

lessthan

than95

95or

ormore

morethan

than105.

105.

HH00ifif the

Inaacourtroom

courtroomwe

wemay

maysay:

say:The

Theaccused

accusedisisinnocent

innocentuntil

untilproven

proven

In

guiltybeyond

beyondaareasonable

reasonabledoubt.

doubt.

guilty

7-10

Decision Making

There are

are two

two possible

possible states

states of

of nature:

nature:

There

true

HH00isistrue

false

HH00isisfalse

There are

are two

two possible

possible decisions:

decisions:

There

Fail to

to reject

reject H

H00 as

as true

true

Fail

Reject H

H00 as

as false

false

Reject

7-11

Decision Making

decision may

may be

be correct

correct in

in two

two ways:

ways:

AAdecision

Fail to

to reject

reject aa true

true H

H00

Fail

Reject aa false

false H

H00

Reject

decision may

may be

be incorrect

incorrect in

in two

two ways:

ways:

AAdecision

Type II Error:

Error: Reject

Reject aa true

true H

H00

Type

The Probability

Probability of

of aaType

Type II error

error isis denoted

denoted

The

by .

.

by

Type IIII Error:

Error: Fail

Fail to

to reject

reject aa false

false H

H00

Type

The Probability

Probability of

of aaType

Type IIII error

error isis denoted

denoted

The

by .

.

by

7-12

decisionmay

maybe

beincorrect

incorrectin

intwo

twoways:

ways:

AAdecision

TypeIIError:

Error:Reject

Rejectaatrue

trueHH00

Type

TheProbability

ProbabilityofofaaType

TypeI Ierror

errorisisdenoted

denotedby

by.

.

The

calledthe

thelevel

levelofofsignificance

significanceofofthe

thetest

test

isiscalled

TypeIIIIError:

Error:Accept

Acceptaafalse

falseHH00

Type

TheProbability

ProbabilityofofaaType

TypeIIIIerror

errorisisdenoted

denotedby

by..

The

calledthe

thepower

powerofofthe

thetest.

test.

11- -isiscalled

andare

areconditional

conditionalprobabilities:

probabilities:

and

= P(Reject H 0 H 0 is true)

= P(Accept H 0 H 0 is false)

7-13

Acontingency

contingencytable

table illustrates

illustrates the

the possible

possible outcomes

outcomes

A

of aastatistical

statistical hypothesis

hypothesis test.

test.

of

7-14

The p-Value

Thep-value

p-valueisisthe

theprobability

probabilityof

ofobtaining

obtainingaavalue

valueof

ofthe

thetest

teststatistic

statisticas

as

The

extremeas,

as,or

ormore

moreextreme

extremethan,

than,the

theactual

actualvalue

valueobtained,

obtained,when

whenthe

thenull

null

extreme

hypothesisisistrue.

true.

hypothesis

Thep-value

p-valueisisthe

thesmallest

smallestlevel

levelof

ofsignificance,

significance,,

,atatwhich

whichthe

thenull

null

The

hypothesismay

maybe

berejected

rejectedusing

usingthe

theobtained

obtainedvalue

valueof

ofthe

thetest

teststatistic.

statistic.

hypothesis

RULE:When

Whenthe

thep-value

p-valueisisless

lessthan

than, ,reject

rejectHH0. .

RULE:

0

given later in the chapter when examples on hypothesis

tests are presented.

7-15

The power

power of

of aa statistical

statistical hypothesis

hypothesis test

test isis the

the

The

probability of

of rejecting

rejecting the

the null

null hypothesis

hypothesis when

when the

the

probability

null hypothesis

hypothesis isis false.

false.

null

Power== (1

(1 -- )

)

Power

7-16

Theprobability

probabilityofofaatype

typeIIIIerror,

error,and

andthe

thepower

powerofofaatest,

test,depends

dependson

onthe

theactual

actualvalue

value

The

theunknown

unknownpopulation

populationparameter.

parameter. The

Therelationship

relationshipbetween

betweenthe

thepopulation

populationmean

mean

ofofthe

andthe

thepower

powerofofthe

thetest

testisiscalled

calledthe

thepower

powerfunction.

function.

and

Valueofof

Power

Power==(1

(1--)

)

Value

0.8739

0.8739

0.7405

0.7405

0.5577

0.5577

0.3613

0.3613

0.1963

0.1963

0.0877

0.0877

0.0318

0.0318

0.0092

0.0092

0.0021

0.0021

0.1261

0.1261

0.2695

0.2695

0.4423

0.4423

0.6387

0.6387

0.8037

0.8037

0.9123

0.9123

0.9682

0.9682

0.9908

0.9908

0.9972

0.9972

1.0

0.9

Power

61

61

62

62

63

63

64

64

65

65

66

66

67

67

68

68

69

69

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0.0

60

61

62

63

64

65

66

67

68

69

70

7-17

The power depends on the distance between the value of the parameter under

the null hypothesis and the true value of the parameter in question: the greater

this distance, the greater the power.

The power depends on the population standard deviation: the smaller the

population standard deviation, the greater the power.

The power depends on the sample size used: the larger the sample, the greater

the power.

The power depends on the level of significance of the test: the smaller the level

of significance,, the smaller the power.

7-18

Example

companythat

thatdelivers

deliverspackages

packageswithin

withinaalarge

largemetropolitan

metropolitan

AAcompany

areaclaims

claimsthat

thatitittakes

takesan

anaverage

averageof

of28

28minutes

minutesfor

foraapackage

packageto

to

area

bedelivered

deliveredfrom

fromyour

yourdoor

doorto

tothe

thedestination.

destination. Suppose

Supposethat

thatyou

you

be

wantto

tocarry

carryout

outaahypothesis

hypothesistest

testof

ofthis

thisclaim.

claim.

want

Set the null and alternative hypotheses:

H0: = 28

H1: 28

Collect sample data:

n = 100

x = 31.5

s=5

Construct a 95% confidence interval for

the average delivery times of all packages:

x z

. 025

s

5

315

. 196

.

n

100

315

. .98 30.52, 32.48

all packages is between 30.52 and 32.48

minutes.

Since the asserted value, 28 minutes, is not

in this 95% confidence interval, we may

reasonably reject the null hypothesis.

7-19

Recall:

Thep-value

p-valueisisthe

theprobability

probabilityof

ofobtaining

obtainingaavalue

valueof

ofthe

thetest

teststatistic

statisticas

as

The

extremeas,

as,or

ormore

moreextreme

extremethan,

than,the

theactual

actualvalue

valueobtained,

obtained,when

whenthe

thenull

null

extreme

hypothesisisistrue.

true.

hypothesis

Thep-value

p-valueisisthe

thesmallest

smallestlevel

levelof

ofsignificance,

significance,,

,atatwhich

whichthe

thenull

null

The

hypothesismay

maybe

berejected

rejectedusing

usingthe

theobtained

obtainedvalue

valueof

ofthe

thetest

teststatistic.

statistic.

hypothesis

7-20

Example

Anautomatic

automaticbottling

bottlingmachine

machinefills

fillscola

colainto

intotwo

twoliter

liter(2000

(2000cc)

cc)bottles.

bottles. AAconsumer

consumeradvocate

advocatewants

wants

An

testthe

thenull

nullhypothesis

hypothesisthat

thatthe

theaverage

averageamount

amountfilled

filledby

bythe

themachine

machineinto

intoaabottle

bottleisisatatleast

least2000

2000

tototest

cc. AArandom

randomsample

sampleofof40

40bottles

bottlescoming

comingout

outofofthe

themachine

machinewas

wasselected

selectedand

andthe

theexact

exactcontent

contentofof

cc.

theselected

selectedbottles

bottlesare

arerecorded.

recorded. The

Thesample

samplemean

meanwas

was1999.6

1999.6cc.

cc. The

Thepopulation

populationstandard

standard

the

deviationisisknown

knownfrom

frompast

pastexperience

experiencetotobe

be1.30

1.30cc.

cc.

deviation

Computethe

thep-value

p-valuefor

forthis

thistest.

test.

Compute

2000

HH0:0:2000

2000

HH1:1:2000

40,0==2000,

2000,x-bar

x-bar==1999.6,

1999.6,

nn==40,

0

1.3

==1.3

Thetest

teststatistic

statisticis:

is:

The

x 0

x0 =1999.6

1999.6--2000

2000

x

z

0

z =

1.3

1.3

40

nn

40

1.95

==1.95

valueP(Z

P(Z--1.95)

1.95)

pp--value

0.5000--0.4744

0.4744

0.5000

0.0256

0.0256

7-21

Anautomatic

automaticbottling

bottlingmachine

machinefills

fillscola

colainto

intotwo

twoliter

liter(2000

(2000cc)

cc)bottles.

bottles. AAconsumer

consumeradvocate

advocatewants

wants

An

testthe

thenull

nullhypothesis

hypothesisthat

thatthe

theaverage

averageamount

amountfilled

filledby

bythe

themachine

machineinto

intoaabottle

bottleisisatatleast

least2000

2000

tototest

cc. AArandom

randomsample

sampleofof40

40bottles

bottlescoming

comingout

outofofthe

themachine

machinewas

wasselected

selectedand

andthe

theexact

exactcontent

contentofof

cc.

theselected

selectedbottles

bottlesare

arerecorded.

recorded. The

Thesample

samplemean

meanwas

was1999.6

1999.6cc.

cc. The

Thepopulation

populationstandard

standard

the

deviationisisknown

knownfrom

frompast

pastexperience

experiencetotobe

be1.30

1.30cc.

cc.

deviation

Computethe

thep-value

p-valuefor

forthis

thistest.

test.

Compute

7-22

P-value

7-23

Thetails

tailsof

ofaastatistical

statisticaltest

testare

aredetermined

determinedby

bythe

theneed

needfor

foran

anaction.

action. IfIfaction

action

The

betaken

takenififaaparameter

parameterisisgreater

greaterthan

thansome

somevalue

valuea,a,then

thenthe

thealternative

alternative

isistotobe

hypothesisisisthat

thatthe

theparameter

parameterisisgreater

greaterthan

thana,a,and

andthe

thetest

testisisaaright-tailed

right-tailed

hypothesis

test.

50

test.

HH0:0:50

50

HH1:1:50

actionisistotobe

betaken

takenififaaparameter

parameterisisless

lessthan

thansome

somevalue

valuea,a,then

thenthe

the

IfIfaction

alternativehypothesis

hypothesisisisthat

thatthe

theparameter

parameterisisless

lessthan

thana,a,and

andthe

thetest

testisisaa

alternative

left-tailedtest.

test.

50

left-tailed

HH0:0:50

50

HH1:1:50

actionisistotobe

betaken

takenififaaparameter

parameterisiseither

eithergreater

greaterthan

thanor

orless

lessthan

thansome

some

IfIfaction

valuea,a,then

thenthe

thealternative

alternativehypothesis

hypothesisisisthat

thatthe

theparameter

parameterisisnot

notequal

equaltotoa,a,

value

andthe

thetest

testisisaatwo-tailed

two-tailedtest.

test. HH:0:50

50

and

0

50

HH1:1:50

7-24

Considerthe

thefollowing

followingnull

nulland

andalternative

alternativehypotheses:

hypotheses:

Consider

1000

HH0:0:1000

1000

HH1:1:1000

Let==5,5,==5%,

5%,and

andnn==100.

100. We

Wewish

wishtotocompute

computewhen

when==1==998.

998.

Let

1

Referto

tonext

nextslide

slide

Refer

Thefigure

figureshows

showsthe

thedistribution

distributionof

ofx-bar

x-barwhen

when==0==1000,

1000,and

andwhen

when

The

0

998.

==11==998.

Notethat

thatHH0will

willbe

berejected

rejectedwhen

whenx-bar

x-barisisless

lessthan

thanthe

thecritical

criticalvalue

valuegiven

given

Note

0

by(x-bar)

(x-bar)crit==0-z-z/n

/n==1000

10001.6455/

1.6455/100

100==999.18.

999.18.

by

crit

0

Conversely,HH0will

willnot

notbe

berejected

rejectedwhenever

wheneverx-bar

x-barisisgreater

greaterthan

than(x-bar)

(x-bar) crit. .

Conversely,

0

crit

7-25

Computing (continued)

7-26

Computing (continued)

When==1==998,

998,will

willbe

bethe

theprobability

probabilityof

ofnot

notrejecting

rejectingHH0which

which

When

1

0

impliesthat

thatP{(x-bar

P{(x-bar>>(x-bar)

(x-bar)crit}.}.

implies

crit

When==,1,x-bar

x-barwill

willfollow

followaanormal

normaldistribution

distributionwith

withmean

mean1and

and

When

1

1

standarddeviation

deviation==/n.

/n. Thus,

Thus,

standard

X crit 1

P Z

P( Z 1.18 / 0.5) P( Z 2.360)

/ n

0.0091

Thepower

powerof

ofthe

thetest

test==110.0091

0.0091==0.9909.

0.9909.

The

7-27

7-28

Wewill

willsee

seethe

thethree

threedifferent

differenttypes

typesof

ofhypothesis

hypothesistests,

tests,namely

namely

We

Tests

Testsof

ofhypotheses

hypothesesabout

aboutpopulation

populationmeans.

means.

Tests

Testsof

ofhypotheses

hypothesesabout

aboutpopulation

populationproportions.

proportions.

Tests

Testsof

ofhypotheses

hypothesesabout

aboutpopulation

populationvariances.

variances.

7-29

Casesin

inwhich

whichthe

thetest

teststatistic

statisticisisZZ

Cases

isisknown

knownand

andthe

thepopulation

populationisisnormal.

normal.

isisknown

knownand

andthe

thesample

samplesize

sizeisisatatleast

least30.

30. (The

(Thepopulation

population

neednot

notbe

benormal)

normal)

need

The formula

formula for

forcalculatin

calculatingg ZZ isis::

The

x

x

zz

n

n

7-30

Casesin

inwhich

whichthe

thetest

teststatistic

statisticisistt

Cases

isisunknown

unknownbut

butthe

thesample

samplestandard

standarddeviation

deviationisisknown

knownand

and

thepopulation

populationisisnormal.

normal.

the

The formula

formula for

forcalculatin

calculatinggttisis::

The

x

x

tt s

s

n

n

7-31

Rejection Region

numbers that will lead us to reject the null hypothesis in case the

test statistic falls within this range. The rejection region, also

called the critical region, is defined by the critical points. The

rejection region is defined so that, before the sampling takes

place, our test statistic will have a probability of falling within

the rejection region if the null hypothesis is true.

7-32

Nonrejection Region

critical points) that will lead us not to reject the null hypothesis if the

test statistic should fall within this region. The nonrejection region is

designed so that, before the sampling takes place, our test statistic will

have a probability 1- of falling within the nonrejection region if the

null hypothesis is true

tails of the sampling distribution.

7-33

Population

mean under H0

= 28

95% confidence

interval around

observed sample mean

30.52

x = 31.5

32.48

It seems reasonable to reject the null hypothesis, H 0: = 28, since the hypothesized

value lies outside the 95% confidence interval. If we are 95% sure that the

population mean is between 30.52 and 32.58 minutes, it is very unlikely that the

population mean will actually be 28 minutes.

Note that the population mean may be 28 (the null hypothesis might be true), but

then the observed sample mean, 31.5, would be a very unlikely occurrence. There

is still the small chance (= 0.05) that we might reject the true null hypothesis.

represents the level of significance of the test.

7-34

Nonrejection Region

If the observed sample mean falls within the nonrejection region, then you fail

to reject the null hypothesis as true. Construct a 95% nonrejection region

around the hypothesized population mean, and compare it with the 95%

confidence interval around the observed sample mean:

0 z.025

s

5

28 1.96

n

100

28.98 27,02 ,28.98

around the

population Mean

27.02

0=28

28.98

95% Confidence

Interval

around the

Sample Mean

30.52

x z .025

s

5

315

. 1.96

n

100

315

. .98 30.52 ,32.48

32.48

The nonrejection region and the confidence interval are the same width, but

centered on different points. In this instance, the nonrejection region does not

include the observed sample mean, and the confidence interval does not include

the hypothesized population mean.

7-35

Rejection Regions

If the null hypothesis were

true, then the sampling

distribution of the mean

would look something

like this:

0.8

0.7

.95

0.6

0.5

0.4

0.3

0.2

.025

.025

0.1

sampling distribution between

the critical points 27.02 and 28.98,

and 2.5% below 27.02 and 2.5% above 28.98 (a two-tailed test).

The 95% interval around the hypothesized mean defines the

nonrejection region, with the remaining 5% in two rejection

regions.

0.0

27.02

0=28

28.98

7-36

The Hypothesized Sampling Distribution of the Mean

0.8

0.7

.95

0.6

0.5

0.4

0.3

0.2

.025

.025

0.1

0.0

27.02

0=28

28.98

x

Lower Rejection

Region

Nonrejection

Region

Upper Rejection

Region

mean.

Do not reject H0 if the sample mean falls within the nonrejection region (between the

critical points).

Reject H0 if the sample mean falls outside the nonrejection region.

7-37

Example 7-5

An automatic bottling machine fills cola into two liter (2000 cc) bottles. A consumer advocate wants to test the

null hypothesis that the average amount filled by the machine into a bottle is at least 2000 cc. A random sample of

40 bottles coming out of the machine was selected and the exact content of the selected bottles are recorded. The

sample mean was 1999.6 cc. The population standard deviation is known from past experience to be 1.30 cc.

Test the null hypothesis at the 5% significance level.

2000

HH0:0:2000

2000

HH1:1:2000

40

nn==40

For==0.05,

0.05,the

thecritical

criticalvalue

value

For

ofzzisis-1.645

-1.645

of

Thetest

teststatistic

statisticis:

is: z

The

x 0

40

nn==40

1999.6

xx==1999.6

1.3

==1.3

1999.6--2000

2000

xx 0 1999.6

0

z

=

z

=

1.3

nn

1.3

40

40

Donot

notreject

rejectHH0if:

if:[z[z-1.645]

-1.645]

Do

0

RejectHH0if:

if:zz]

]

Reject

0

1.95

Reject

RejectHH

==1.95

00

7-38

An automatic bottling machine fills cola into two liter (2000 cc) bottles. A consumer advocate wants to test the

null hypothesis that the average amount filled by the machine into a bottle is at least 2000 cc. A random sample of

40 bottles coming out of the machine was selected and the exact content of the selected bottles are recorded. The

sample mean was 1999.6 cc. The population standard deviation is known from past experience to be 1.30 cc.

Test the null hypothesis at the 5% significance level.

2000

HH0:0:2000

2000

HH1:1:2000

40

nn==40

For==0.05,

0.05,the

thecritical

criticalvalue

value

For

ofzzisis-1.645

-1.645

of

Thetest

teststatistic

statisticis:

is:

The

x 0

Donot

notreject

rejectHH0if:

if:[p-value

[p-value]

]

Do

0

RejectHH0if:

if:p-value

p-value]

]

Reject

0

1999.6--2000

2000

xx 0 1999.6

0

z

=

z

=

1.3

nn

1.3

40

40

1.95

==1.95

valueP(Z

P(Z- -1.95)

1.95)

pp- -value

0.5000- -0.4744

0.4744

0.5000

0.0256

Reject

RejectHH since

since0.0256

0.02560.05

0.05

0.0256

0

0

7-39

n = 40

the null hypothesis changed when the

sample size changed from 40 to 20.

n = 20

7-40

P-value

7-41

P-value

Sample Data

Results when

is known

Results when

is unknown

the null hypothesis changed

when the population standard

deviation is known or unknown.

7-42

Data and = 1.8

P-value

7-43

Data with unknown

P-value

7-44

7-45

Casesin

inwhich

whichthe

thebinomial

binomialdistribution

distributioncan

canbe

beused

used

Cases

Thebinomial

binomialdistribution

distributioncan

canbe

beused

usedwhenever

wheneverwe

weare

areable

ableto

to

The

calculatethe

thenecessary

necessarybinomial

binomialprobabilities.

probabilities. This

Thismeans

meansthat

that

calculate

forcalculations

calculationsusing

usingtables,

tables,the

thesample

samplesize

sizennand

andthe

thepopulation

population

for

proportionppshould

shouldhave

havebeen

beentabulated.

tabulated.

proportion

Note:For

Forcalculations

calculationsusing

usingspreadsheet

spreadsheettemplates,

templates,sample

sample

Note:

sizesup

upto

to500

500are

arefeasible.

feasible.

sizes

7-46

Casesin

inwhich

whichthe

thenormal

normalapproximation

approximationisisto

tobe

beused

used

Cases

thesample

samplesize

sizennisistoo

toolarge

large(n

(n>>500)

500)to

tocalculate

calculatebinomial

binomial

IfIfthe

probabilities,then

thenthe

thenormal

normalapproximation

approximationcan

canbe

beused,

used,and

andthe

the

probabilities,

populationproportion

proportionppshould

shouldhave

havebeen

beentabulated.

tabulated.

population

7-47

coinisistototested

testedfor

forfairness.

fairness. ItItisistossed

tossed25

25times

timesand

andonly

only88Heads

Headsare

are

AAcoin

observed.Test

Testififthe

thecoin

coinisisfair

fairatatan

anof

of5%

5%(significance

(significancelevel).

level).

observed.

Letppdenote

denotethe

theprobability

probabilityof

ofaaHead

Head

Let

0.5

HH0:0:pp0.5

p

HH1:1:p

Becausethis

thisisisaa2-tailed

2-tailedtest,

test,the

thep-value

p-value==2*P(X

2*P(X

Because

Fromthe

thebinomial

binomialtables,

tables,with

withnn==25,

25,pp==0.5,

0.5,this

thisvalue

value

From

2*0.054==0.108.

0.108.

2*0.054

Since0.108

0.108>>==0.05,

0.05,then

then

Since

donot

notreject

rejectHH0

do

0

the Binomial Distribution

7-48

Normal Approximation

7-49

Approximation

from the previous slide because we used the

normal approximation.

7-50

7-51

Fortesting

testinghypotheses

hypothesesabout

aboutpopulation

populationvariances,

variances,the

thetest

test

For

statistic(chi-square)

(chi-square)is:

is:

statistic

n 1 s

2

0

where isisthe

theclaimed

claimedvalue

valueof

ofthe

thepopulation

populationvariance

variancein

inthe

the

where

nullhypothesis.

hypothesis. The

Thedegrees

degreesof

offreedom

freedomfor

forthis

thischi-square

chi-square

null

randomvariable

variableisis(n

(n1).

1).

random

2

Note:Since

Sincethe

thechi-square

chi-squaretable

tableonly

onlyprovides

providesthe

thecritical

criticalvalues,

values,itit

Note:

cannotbe

beused

usedto

tocalculate

calculateexact

exactp-values.

p-values. As

Asin

inthe

thecase

caseof

ofthe

thet-tables,

t-tables,

cannot

onlyaarange

rangeof

ofpossible

possiblevalues

valuescan

canbe

beinferred.

inferred.

only

7-52

Example 7-8

manufacturerofofgolf

golfballs

ballsclaims

claimsthat

thatthey

theycontrol

controlthe

theweights

weightsof

ofthe

thegolf

golfballs

balls

AAmanufacturer

accuratelyso

sothat

thatthe

thevariance

varianceofofthe

theweights

weightsisisnot

notmore

morethan

than11mg

mg2.2. AArandom

randomsample

sample

accurately

31golf

golfballs

ballsyields

yieldsaasample

samplevariance

varianceof

of1.62

1.62mg

mg2.2. IsIsthat

thatsufficient

sufficientevidence

evidencetoto

ofof31

rejectthe

theclaim

claimatatan

anofof5%?

5%?

reject

Let22denote

denotethe

thepopulation

populationvariance.

variance. Then

Then

Let

2

1

HH0:0:2 1

2

HH1:1:2

Inthe

thetemplate

template(see

(seenext

nextslide),

slide),enter

enter31

31for

forthe

thesample

samplesize

size

In

and1.62

1.62for

forthe

thesample

samplevariance.

variance.Enter

Enterthe

thehypothesized

hypothesizedvalue

value

and

of11inincell

cellD11.

D11. The

Thep-value

p-valueof

of0.0173

0.0173appears

appearsinincell

cellE13.

E13. Since

Since

of

thisvalue

valueisisless

lessthan

thanthe

theof

of5%,

5%,we

wereject

rejectthe

thenull

nullhypothesis.

hypothesis.

this

7-53

7-54

P- value

7-55

Aspart

partofofaasurvey

surveytotodetermine

determinethe

theextent

extentofofrequired

requiredin-cabin

in-cabinstorage

storagecapacity,

capacity,aa

As

researcherneeds

needstototest

testthe

thenull

nullhypothesis

hypothesisthat

thatthe

theaverage

averageweight

weightofofcarry-on

carry-onbaggage

baggage

researcher

perperson

personisis==12

12pounds,

pounds,versus

versusthe

thealternative

alternativehypothesis

hypothesisthat

thatthe

theaverage

averageweight

weight

per

not12

12pounds.

pounds. The

Theanalyst

analystwants

wantstototest

testthe

thenull

nullhypothesis

hypothesisatat=

=0.05.

0.05.

isisnot

=12

12

HH0:0:=

12

HH1:1:12

0.8

0.7

.95

0.6

For==0.05,

0.05,critical

criticalvalues

valuesof

ofzzare

are1.96

1.96

For

x 0

z

Thetest

teststatistic

statisticis:

is:

s

The

n

Donot

notreject

rejectHH0if:

if:[-1.96

[-1.96z

z1.96]

1.96]

Do

0

RejectHH0if:

if:[z[z<-1.96]

<-1.96]or

or zz1.96]

1.96]

Reject

0

0.5

0.4

0.3

0.2

.025

.025

0.1

0.0

-1.96

Lower Rejection

Region

1.96

Nonrejection

Region

Upper Rejection

Region

7-56

144

nn == 144

14.6

xx == 14.6

7.8

ss == 7.8

x 0 14.6-12

14.6-12

x

0

zz s == 7.8

s

7.8

144

nn

144

2.6

2.6

=

= 0.6544

0.65

0.8

0.7

.95

0.6

0.5

0.4

0.3

0.2

.025

.025

0.1

0.0

-1.96

1.96

Lower Rejection

Region

Nonrejection

Region

Upper Rejection

Region

Sincethe

thetest

teststatistic

statisticfalls

fallsininthe

theupper

upperrejection

rejectionregion,

region,HH 0isisrejected,

rejected,and

andwe

wemay

may

Since

0

concludethat

thatthe

theaverage

averageamount

amountof

ofcarry-on

carry-onbaggage

baggageisismore

morethan

than12

12pounds.

pounds.

conclude

7-57

Aninsurance

insurancecompany

companybelieves

believesthat,

that,over

overthe

thelast

lastfew

fewyears,

years,the

theaverage

averageliability

liability

An

insuranceper

perboard

boardseat

seatinincompanies

companiesdefined

definedas

assmall

smallcompanies

companieshas

hasbeen

been$2000.

$2000.

insurance

Using==0.01,

0.01,test

testthis

thishypothesis

hypothesisusing

usingGrowth

GrowthResources,

Resources,Inc.

Inc.survey

surveydata.

data.

Using

100

nn == 100

2700

xx == 2700

947

s s == 947

=2000

2000

HH0:0:=

2000

HH:1:2000

1

For==0.01,

0.01,critical

criticalvalues

valuesof

ofzzare

are2.576

2.576

For

Thetest

teststatistic

statisticis:

is:

The

x 0

z

s

n

Donot

notreject

rejectHH0if:

if:[-2.576

[-2.576z

z 2.576]

2.576]

Do

0

RejectHH0if:

if:[z[z<-2.576]

<-2.576]or

or zz2.576]

2.576]

Reject

0

z z

xx00

ss

nn

==

700

700

2700- -2000

2000

2700

=

=

947

947

100

100

.39

Reject

RejectHH

77.39

94.7

00

94.7

7-58

The Standard Normal Distribution

0.8

0.7

.99

0.6

0.5

0.4

0.3

0.2

.005

.005

0.1

0.0

-2.576

2.576

Lower Rejection

Region

Nonrejection

Region

Upper Rejection

Region

Sincethe

thetest

teststatistic

statisticfalls

fallsin

in

Since

theupper

upperrejection

rejectionregion,

region,HH00

the

rejected,and

andwe

wemay

may

isisrejected,

concludethat

thatthe

theaverage

average

conclude

insuranceliability

liabilityper

perboard

board

insurance

seatin

insmall

smallcompanies

companiesisis

seat

morethan

than$2000.

$2000.

more

7-59

Theaverage

averagetime

timeitittakes

takesaacomputer

computertotoperform

performaacertain

certaintask

taskisisbelieved

believedtotobe

be3.24

3.24

The

seconds. ItItwas

wasdecided

decidedtototest

testthe

thestatistical

statisticalhypothesis

hypothesisthat

thatthe

theaverage

averageperformance

performance

seconds.

timeofofthe

thetask

taskusing

usingthe

thenew

newalgorithm

algorithmisisthe

thesame,

same,against

againstthe

thealternative

alternativethat

thatthe

the

time

averageperformance

performancetime

timeisisno

nolonger

longerthe

thesame,

same,atatthe

the0.05

0.05level

levelofofsignificance.

significance.

average

=3.24

3.24

HH0:0:=

3.24

HH1:1:3.24

For==0.05,

0.05,critical

criticalvalues

valuesof

ofzzare

are1.96

1.96

For

Thetest

teststatistic

statisticis:

is:

The

x 0

s

n

Donot

notreject

rejectHH0if:

if:[-1.96

[-1.96z

z1.96]

1.96]

Do

0

RejectHH0if:

if:[z[z<<-1.96]

-1.96]or

or zz1.96]

1.96]

Reject

0

200

nn == 200

3.48

xx == 3.48

2.8

s s == 2.8

z z

xx00

ss

nn

==

3.48--3.24

3.24

3.48

==

2.8

2.8

200

200

0.24

0.24

.21

Do

Donot

notreject

rejectHH

11.21

0.20

00

0.20

7-60

The Standard Normal Distribution

0.8

0.7

.95

0.6

0.5

0.4

0.3

0.2

.025

.025

0.1

0.0

-1.96

1.96

Lower Rejection

Region

Nonrejection

Region

Upper Rejection

Region

Sincethe

thetest

teststatistic

statisticfalls

fallsin

in

Since

thenonrejection

nonrejectionregion,

region,HH00isis

the

notrejected,

rejected,and

andwe

wemay

may

not

concludethat

thatthe

theaverage

average

conclude

performancetime

timehas

hasnot

not

performance

changedfrom

from3.24

3.24seconds.

seconds.

changed

7-61

Accordingtotothe

theJapanese

JapaneseNational

NationalLand

LandAgency,

Agency,average

averageland

landprices

pricesinincentral

centralTokyo

Tokyo

According

soared49%

49%ininthe

thefirst

firstsix

sixmonths

monthsofof1995.

1995. An

Aninternational

internationalreal

realestate

estateinvestment

investment

soared

companywants

wantstototest

testthis

thisclaim

claimagainst

againstthe

thealternative

alternativethat

thatthe

theaverage

averageprice

pricedid

didnot

notrise

rise

company

by49%,

49%,atataa0.01

0.01level

levelofofsignificance.

significance.

by

=49

49

HH0:0:=

49

HH1:1:49

18

nn==18

For==0.01

0.01and

and(18-1)

(18-1)==17

17df

df, ,

For

criticalvalues

valuesof

ofttare

are2.898

2.898

critical

Thetest

teststatistic

statisticis:

is:

The

x 0

s

n

Donot

notreject

rejectHH0if:

if:[-2.898

[-2.898t

t 2.898]

2.898]

Do

0

RejectHH0if:

if:[t[t<<-2.898]

-2.898]or

or tt2.898]

2.898]

Reject

0

n = 18

n = 18

x = 38

x = 38

s = 14

s = 14

t

t

x

38 - 49

x 0

0 == 38 - 49

s

14

s

14

n

18

n

18

- 11

=- 11 3.33 Reject H

= 3.3 3.33 Reject H 0

0

3.3

7-62

The t Distribution

0.8

0.7

.99

0.6

0.5

0.4

0.3

0.2

.005

.005

0.1

0.0

-2.898

2.898

Lower Rejection

Region

Nonrejection

Region

Upper Rejection

Region

Sincethe

thetest

teststatistic

statisticfalls

fallsin

in

Since

therejection

rejectionregion,

region,HH0isis

the

0

rejected,and

andwe

wemay

mayconclude

conclude

rejected,

thatthe

theaverage

averageprice

pricehas

hasnot

not

that

risenby

by49%.

49%. Since

Sincethe

thetest

test

risen

statisticisisin

inthe

thelower

lower

statistic

rejectionregion,

region,we

wemay

may

rejection

concludethat

thatthe

theaverage

average

conclude

pricehas

hasrisen

risenby

byless

lessthan

than

price

49%.

49%.

7-63

Canon,Inc,.

Inc,.has

hasintroduced

introducedaacopying

copyingmachine

machinethat

thatfeatures

featurestwo-color

two-colorcopying

copyingcapability

capability

Canon,

compactsystem

systemcopier.

copier. The

Theaverage

averagespeed

speedofofthe

thestandard

standardcompact

compactsystem

systemcopier

copierisis

ininaacompact

27copies

copiesper

perminute.

minute. Suppose

Supposethe

thecompany

companywants

wantstototest

testwhether

whetherthe

thenew

newcopier

copierhas

hasthe

the

27

sameaverage

averagespeed

speedas

asits

itsstandard

standardcompact

compactcopier.

copier. Conduct

Conductaatest

testatatan

an=

=0.05

0.05 level

level

same

significance.

ofofsignificance.

=27

27

HH0:0:=

27

HH1:1:27

24

nn==24

For==0.05

0.05and

and(24-1)

(24-1)==23

23df

df, ,

For

criticalvalues

valuesof

ofttare

are2.069

2.069

critical

Thetest

teststatistic

statisticis:

is:

The

x 0

s

n

Donot

notreject

rejectHH0if:

if:[-2.069

[-2.069t

t 2.069]

2.069]

Do

0

RejectHH0if:

if:[t[t<<-2.069]

-2.069]or

or tt2.069]

2.069]

Reject

0

24

nn == 24

24.6

xx == 24.6

7.4

s s == 7.4

t t

xx00

ss

nn

24.6--27

27

24.6

==

7.4

7.4

24

24

-2.4

-2.4

.59

==

1.159

1.51

1.51

Do

Donot

notreject

rejectHH

00

7-64

The t Distribution

0.8

0.7

.95

0.6

0.5

0.4

0.3

0.2

.025

.025

0.1

0.0

-2.069

2.069

Lower Rejection

Region

Nonrejection

Region

Upper Rejection

Region

Sincethe

thetest

teststatistic

statisticfalls

fallsin

in

Since

thenonrejection

nonrejectionregion,

region,HH00isis

the

notrejected,

rejected,and

andwe

wemay

maynot

not

not

concludethat

thatthe

theaverage

average

conclude

speedisisdifferent

differentfrom

from27

27

speed

copiesper

perminute.

minute.

copies

7-65

Statistical Significance

While the null hypothesis is maintained to be true throughout a hypothesis

test, until sample data lead to a rejection, the aim of a hypothesis test is

often to disprove the null hypothesis in favor of the alternative hypothesis.

This is because we can determine and regulate , the probability of a Type I

error, making it as small as we desire, such as 0.01 or 0.05. Thus, when we

reject a null hypothesis, we have a high level of confidence in our decision,

since we know there is a small probability that we have made an error.

A given sample mean will not lead to a rejection of a null hypothesis unless

it lies in outside the nonrejection region of the test. That is, the nonrejection

region includes all sample means that are not significantly different, in a

statistical sense, from the hypothesized mean. The rejection regions, in turn,

define the values of sample means that are significantly different, in a

statistical sense, from the hypothesized mean.

7-66

Aninvestment

investmentanalyst

analystfor

forGoldman

GoldmanSachs

Sachsand

andCompany

Companywanted

wantedtototest

testthe

thehypothesis

hypothesis

An

madeby

byBritish

Britishsecurities

securitiesexperts

expertsthat

that70%

70%ofofall

allforeign

foreigninvestors

investorsininthe

theBritish

Britishmarket

market

made

wereAmerican.

American. The

Theanalyst

analystgathered

gatheredaarandom

randomsample

sampleofof210

210accounts

accountsofofforeign

foreign

were

investorsininLondon

Londonand

andfound

foundthat

that130

130were

wereowned

ownedby

byU.S.

U.S.citizens.

citizens. At

Atthe

the=

=0.05

0.05

investors

levelofofsignificance,

significance,isisthere

thereevidence

evidencetotoreject

rejectthe

theclaim

claimofofthe

theBritish

Britishsecurities

securitiesexperts?

experts?

level

0.70

HH0:0:pp==0.70

0.70

HH1:1:pp0.70

210

nn==210

For==0.05

0.05critical

criticalvalues

valuesof

ofzzare

are1.96

1.96

For

Thetest

teststatistic

statisticis:

is: z p p0

The

p0 q 0

n

Donot

notreject

rejectHH0if:

if:[-1.96

[-1.96z

z 1.96]

1.96]

Do

0

RejectHH0if:

if:[z[z<<-1.96]

-1.96]or

or zz1.96]

1.96]

Reject

0

210

nn == 210

130

130

p

=

.619

p = 21000.619

210

p p- -pp 0

0

z z==

==

p

q

p 0q 0

0 0

nn

==

0.619--0.70

0.70

0.619

(0.70)(0.30)

(0.70)(0.30)

210

210

-0.081

-0.081

.5614

Reject

RejectHH

22.5614

0.0316

0.0316

00

7-67

TheEPA

EPAsets

setslimits

limitson

onthe

theconcentrations

concentrationsofofpollutants

pollutantsemitted

emittedby

byvarious

variousindustries.

industries. Suppose

Supposethat

thatthe

the

The

upperallowable

allowablelimit

limiton

onthe

theemission

emission ofofvinyl

vinylchloride

chlorideisisset

setatatan

anaverage

averageofof55

55ppm

ppmwithin

withinaarange

rangeofoftwo

two

upper

milesaround

aroundthe

theplant

plantemitting

emittingthis

thischemical.

chemical. To

Tocheck

checkcompliance

compliancewith

withthis

thisrule,

rule,the

theEPA

EPAcollects

collectsaa

miles

randomsample

sampleofof100

100readings

readingsatatdifferent

differenttimes

timesand

anddates

dateswithin

withinthe

thetwo-mile

two-milerange

rangearound

aroundthe

theplant.

plant. The

The

random

findingsare

arethat

thatthe

thesample

sampleaverage

averageconcentration

concentrationisis60

60ppm

ppmand

andthe

thesample

samplestandard

standarddeviation

deviationisis20

20ppm.

ppm.

findings

thereevidence

evidencetotoconclude

concludethat

thatthe

theplant

plantininquestion

questionisisviolating

violatingthe

thelaw?

law?

IsIsthere

55

HH0:0:55

55

HH1:1:55

100

nn==100

For==0.01,

0.01,the

thecritical

criticalvalue

value

For

ofzzisis2.326

2.326

of

Thetest

teststatistic

statisticis:

is:

The

x 0

s

n

Donot

notreject

rejectHH0if:

if:[z[z2.326]

2.326]

Do

0

RejectHH0if:

if:zz2.326]

2.326]

Reject

0

100

nn == 100

60

xx == 60

20

s s == 20

z z

xx00

ss

nn

==

60--55

55

60

20

20

100

100

==

55 2.5

2.5

22

Reject

RejectHH

00

7-68

Critical Point for a Right-Tailed Test

0 .4

0.99

f(z)

0 .3

0 .2

0 .1

0 .0

-5

2.326

2.5

Nonrejection

Region

Rejection

Region

Sincethe

thetest

teststatistic

statisticfalls

fallsin

in

Since

therejection

rejectionregion,

region,HH00isis

the

rejected,and

andwe

wemay

mayconclude

conclude

rejected,

thatthe

theaverage

averageconcentration

concentration

that

ofvinyl

vinylchloride

chlorideisismore

morethan

than

of

55ppm.

ppm.

55

7-69

A certain kind of packaged food bears the following statement on the package: Average net weight 12 oz.

Suppose that a consumer group has been receiving complaints from users of the product who believe that they are

getting smaller quantities than the manufacturer states on the package. The consumer group wants, therefore, to

test the hypothesis that the average net weight of the product in question is 12 oz. versus the alternative that the

packages are, on average, underfilled. A random sample of 144 packages of the food product is collected, and it is

found that the average net weight in the sample is 11.8 oz. and the sample standard deviation is 6 oz. Given these

findings, is there evidence the manufacturer is underfilling the packages?

12

HH0:0:12

12

HH1:1:12

144

nn==144

For==0.05,

0.05,the

thecritical

criticalvalue

value

For

ofzzisis-1.645

-1.645

of

Thetest

teststatistic

statisticis:

is:

The

x 0

s

n

Donot

notreject

rejectHH0if:

if:[z[z-1.645]

-1.645]

Do

0

RejectHH0if:

if:zz]

]

Reject

0

144

nn == 144

11.8

xx == 11.8

ss == 66

11.8-12

-12

xx 0 11.8

0

z

=

z

=

ss

66

144

nn

144

-.2

-.2

=

Do

Donot

notreject

rejectHH

= .5 00.4.4

00

.5

7-70

Critical Point for a Left-Tailed Test

0.4

0.95

f(z)

0.3

0.2

0.1

0.0

-5

-1.645

-0.4

Rejection

Region

Nonrejection

Region

Sincethe

thetest

teststatistic

statisticfalls

fallsin

in

Since

thenonrejection

nonrejectionregion,

region,HH00isis

the

notrejected,

rejected,and

andwe

wemay

maynot

not

not

concludethat

thatthe

the

conclude

manufacturerisisunderfilling

underfilling

manufacturer

packageson

onaverage.

average.

packages

7-71

floodlightisissaid

saidtotolast

lastan

anaverage

averageofof65

65hours.

hours. AAcompetitor

competitorbelieves

believesthat

thatthe

theaverage

averagelife

lifeofofthe

the

AAfloodlight

floodlightisisless

lessthan

thanthat

thatstated

statedby

bythe

themanufacturer

manufacturerand

andsets

setsout

outtotoprove

provethat

thatthe

themanufacturers

manufacturers

floodlight

claimisisfalse.

false. AArandom

randomsample

sampleofof21

21floodlight

floodlightelements

elementsisischosen

chosenand

andshows

showsthat

thatthe

thesample

sample

claim

averageisis62.5

62.5hours

hoursand

andthe

thesample

samplestandard

standarddeviation

deviationisis3.3. Using

Using=0.01,

=0.01,determine

determinewhether

whetherthere

there

average

evidencetotoconclude

concludethat

thatthe

themanufacturers

manufacturersclaim

claimisisfalse.

false.

isisevidence

65

HH0:0:65

65

HH1:1:65

21

nn==21

For==0.01

0.01an

an(21-1)

(21-1)==20

20df,

df,the

the

For

criticalvalue

value-2.528

-2.528

critical

Thetest

teststatistic

statisticis:

is:

The

Donot

notreject

rejectHH0if:

if:[t[t-2.528]

-2.528]

Do

0

RejectHH0if:

if:zz]

]

Reject

0

7-72

Critical Point for a Left-Tailed Test

0 .4

0.95

f(t)

0 .3

0 .2

0 .1

0 .0

-5

-2.528

-3.82

Rejection

Region

Nonrejection

Region

Sincethe

thetest

teststatistic

statisticfalls

fallsin

in

Since

therejection

rejectionregion,

region,HH00isis

the

rejected,and

andwe

wemay

mayconclude

conclude

rejected,

thatthe

themanufacturers

manufacturersclaim

claim

that

false,that

thatthe

theaverage

average

isisfalse,

floodlightlife

lifeisisless

lessthan

than65

65

floodlight

hours.

hours.

7-73

Afterlooking

lookingatat1349

1349hotels

hotelsnationwide,

nationwide,weve

wevefound

found13

13that

thatmeet

meetour

ourstandards.

standards. This

Thisstatement

statementby

bythe

theSmall

Small

After

LuxuryHotels

HotelsAssociation

Associationimplies

impliesthat

thatthe

theproportion

proportionofofall

allhotels

hotelsininthe

theUnited

UnitedStates

Statesthat

thatmeet

meetthe

theassociations

associations

Luxury

standardsisis13/1349=0.0096.

13/1349=0.0096. The

Themanagement

managementofofaahotel

hotelthat

thatwas

wasdenied

deniedacceptance

acceptancetotothe

theassociation

associationwanted

wantedtoto

standards

provethat

thatthe

thestandards

standardsare

arenot

notasasstringent

stringentasasclaimed

claimedand

andthat,

that,ininfact,

fact,the

theproportion

proportionofofall

allhotels

hotelsininthe

theUnited

United

prove

Statesthat

thatwould

wouldqualify

qualifyisishigher

higherthan

than0.0096.

0.0096. The

Themanagement

managementhired

hiredan

anindependent

independentresearch

researchagency,

agency,which

which

States

visitedaarandom

randomsample

sampleofof600

600hotels

hotelsnationwide

nationwideand

andfound

foundthat

that77ofofthem

themsatisfied

satisfiedthe

theexact

exactstandards

standardsset

setby

bythe

the

visited

association. IsIsthere

thereevidence

evidencetotoconclude

concludethat

thatthe

thepopulation

populationproportion

proportionofofall

allhotels

hotelsininthe

thecountry

countrysatisfying

satisfyingthe

the

association.

standardsset

setby

bythe

theSmall

SmallLuxury

Luxuryhotels

hotelsAssociation

Associationisisgreater

greaterthan

than0.0096?

0.0096?

standards

0.0096

HH0:0:pp0.0096

0.0096

HH1:1:pp0.0096

600

nn==600

For==0.10

0.10 the

thecritical

criticalvalue

value1.282

1.282

For

Thetest

teststatistic

statisticis:

is:

The

Donot

notreject

rejectHH0if:

if:[z[z1.282]

1.282]

Do

0

RejectHH0if:

if:zz]

]

Reject

0

7-74

Critical Point for a Right-Tailed Test

0 .4

0.90

f(z)

0 .3

0 .2

0 .1

0 .0

-5

1.282

0.519

Nonrejection

Region

Sincethe

thetest

teststatistic

statisticfalls

fallsin

in

Since

thenonrejection

nonrejectionregion,

region,HH00isis

the

notrejected,

rejected,and

andwe

wemay

maynot

not

not

concludethat

thatproportion

proportionof

ofall

all

conclude

hotelsin

inthe

thecountry

countrythat

thatmeet

meet

hotels

theassociations

associationsstandards

standardsisis

the

greaterthan

than0.0096.

0.0096.

greater

Rejection

Region

MINITAB or the EXCEL templates.

7-75

Standard Normal Distribution

0.4

0.4

f(z)

0.2

0.2

0.1

0.1

0.0

p-value=area to

right of the test statistic

=0.0062

0.3

f(z)

p-value=area to

right of the test statistic

=0.3018

0.3

0.0

-5

0.519

Additional Example k

-5

2.5

Additional Example g

Thep-value

p-valueisisthe

theprobability

probabilityof

ofobtaining

obtainingaavalue

valueof

ofthe

thetest

teststatistic

statisticas

asextreme

extremeas,

as,

The

ormore

moreextreme

extremethan,

than,the

theactual

actualvalue

valueobtained,

obtained,when

whenthe

thenull

nullhypothesis

hypothesisisistrue.

true.

or

Thep-value

p-valueisisthe

thesmallest

smallestlevel

levelof

ofsignificance,

significance,,

,atatwhich

whichthe

thenull

nullhypothesis

hypothesis

The

maybe

berejected

rejectedusing

usingthe

theobtained

obtainedvalue

valueof

ofthe

thetest

teststatistic.

statistic.

may

7-76

Whenthe

thep-value

p-valueisissmaller

smallerthan

than0.01,

0.01,the

theresult

resultisisconsidered

consideredto

to

When

bevery

verysignificant.

significant.

be

Whenthe

thep-value

p-valueisisbetween

between0.01

0.01and

and0.05,

0.05,the

theresult

resultisis

When

consideredto

tobe

besignificant.

significant.

considered

Whenthe

thep-value

p-valueisisbetween

between0.05

0.05and

and0.10,

0.10,the

theresult

resultisis

When

consideredby

bysome

someas

asmarginally

marginallysignificant

significant(and

(andby

bymost

mostas

asnot

not

considered

significant).

significant).

Whenthe

thep-value

p-valueisisgreater

greaterthan

than0.10,

0.10,the

theresult

resultisisconsidered

considered

When

notsignificant.

significant.

not

7-77

p-value=double the area to

left of the test statistic

=2(0.3446)=0.6892

0.4

f(z)

0.3

0.2

0.1

0.0

-5

-0.4

0.4

Inaatwo-tailed

two-tailedtest,

test,we

wefind

findthe

thep-value

p-valueby

bydoubling

doublingthe

thearea

areain

in

In

thetail

tailof

ofthe

thedistribution

distributionbeyond

beyondthe

thevalue

valueof

ofthe

thetest

teststatistic.

statistic.

the

7-78

Thefurther

furtheraway

awayininthe

thetail

tailof

ofthe

thedistribution

distributionthe

thetest

teststatistic

statisticfalls,

falls,the

thesmaller

smaller

The

thep-value

p-valueand,

and,hence,

hence,the

themore

moreconvinced

convincedwe

weare

arethat

thatthe

thenull

nullhypothesis

hypothesisisis

isisthe

falseand

andshould

shouldbe

berejected.

rejected.

false

Inaaright-tailed

right-tailedtest,

test,the

thep-value

p-valueisisthe

thearea

areatotothe

theright

rightof

ofthe

thetest

teststatistic

statisticififthe

the

In

teststatistic

statisticisispositive.

positive.

test

Inaaleft-tailed

left-tailedtest,

test,the

thep-value

p-valueisisthe

thearea

areatotothe

theleft

leftof

ofthe

thetest

teststatistic

statisticififthe

the

In

teststatistic

statisticisisnegative.

negative.

test

Inaatwo-tailed

two-tailedtest,

test,the

thep-value

p-valueisistwice

twicethe

thearea

areatotothe

theright

rightof

ofaapositive

positivetest

test

In

statisticor

ortotothe

theleft

leftof

ofaanegative

negativetest

teststatistic.

statistic.

statistic

Foraagiven

givenlevel

levelof

ofsignificance,:

significance,:

For

Rejectthe

thenull

nullhypothesis

hypothesisififand

andonly

onlyifp-value

ifp-value

Reject

7-79

Onecan

canconsider

considerthe

thefollowing:

following:

One

Sample

SampleSizes

Sizes

versusfor

versusforvarious

varioussample

samplesizes

sizes

The

ThePower

PowerCurve

Curve

The

TheOperating

OperatingCharacteristic

CharacteristicCurve

Curve

with the text to investigate these concepts.

7-80

Note: Similar

analysis can

be done when

testing for a

population

proportion.

Computing and

Plotting Required

Sample size.

7-81

Plot of

versus for

various n.

Note: Similar

analysis can

be done when

testing for a

population

proportion.

7-82

Note: Similar

analysis can

be done when

testing for a

population

proportion.

7-83

The Operating

Characteristic

Curve for

H0:> 75;

= 10; n = 40;

= 10%

Note: Similar

analysis can be

done when

testing a

population

proportion.

7-84

H0:p> 0.52;

p1 = 0.49;

= 10%

Required Sample

size = 2233

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