HYPOTHESIS TESTING- NORMAL DISTRIBUTION

The Normal probability distribution is bell-shaped and has a single peak at the center of the distribution.

is symmetrical about the mean.

is

asymptotic. That is the curve gets closer and closer to the X-axis but never actually touches it.

its mean, , to determine its location and its standard deviation, , to determine its dispersion.
Has

7-10
r a l i t r b u i o n : m = 0 , s2 = 1

Characteristics of a Normal Distribution

0 . 4

Normal curve is symmetrical

0 . 3

Theoretically, curve extends to infinity

. 2

f ( x

. 1

. 0

- 5

Mean, median, and mode are equal

x

Standard Normal (Z) Table

There are infinite number of combination of and exist, an infinite number of normal distributions exist and an infinite number of tables would be required. However, by standardizing the data, we need only one table- Z table

The standard normal distribution is a normal distribution with a mean of 0 and a standard deviation of 1.

It is also called the

z distribution.

The Standard Normal Probability Distribution

Uses of normal distribution

Finding probabilities corresponding to known value of X or Z

Given

X or Z value: find the probability of its occurrence

Finding values of X or Z corresponding to known probabilities

Given

the probability of occurrence: find the X or Z that would occur

Finding probability corresponding to known values of X or Z

Example: An engineering firms contracts received per year follows a normal distribution with = 50 and = 5
Area under a normal bell shaped curve for this firm relate to the entire history of the firm representing the population The probabilities or proportion of the area under the curve must add up to 1

Q) Firm wants to know what is the probability that it will receive between 50 - 55 contracts next year?

Finding probability corresponding to known values of X or Z

Converting to standard normal value

55 50 Z 1.00 5

From the Z table for Z=1.00 the associated probability = 0.3413 A z-value of 1 indicates that the value of 55 is one standard deviation above the mean of 50.

Finding Probabilities Corresponding to Known Values

Area between and + 1 = 0.3431

Area is 0.3413

-3
35 -3

-2
40 -2

-1
45 -1

50 0

+1
55 +1

+2
60 +2

Z +3 Scale
65 (=50, =5) +3
Z Scale

Finding probability corresponding to known values of X or Z

If the firm wants to find out what is the probability that it will get between 45 to 50 contracts next year? Z = -1.00 Area between and - 1 = -0.3431

Finding probability corresponding to known values of X or Z

What is the probability for the firm to get contracts between 45 and 55 next year? Area between 1 = (2 x 0.3431) = 0.6826 Similarly area between 2 = 0.9544 Area between 3 = 0.9973

About 68 percent of the area under the normal curve is within one standard deviation of the mean. +1 About 95 percent is within two standard deviations of the mean. +2 Practically all is within three standard deviations of the mean. +3 Areas Under the Normal
Curve