Chapter Topics

Hypothesis Testing Methodology

Z Test for the Mean (Known)
p-Value Approach to Hypothesis Testing
Connection to Confidence Interval Estimation
One Tail Test
t Test of Hypothesis for the Mean
Z Test of Hypothesis for the Proportion
1999 Prentice-Hall, Inc.

Chap. 8 - 1

What is a Hypothesis?
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.

1999 Prentice-Hall, Inc.

Chap. 8 - 2

The Null Hypothesis, H0

States the Assumption (numerical) to be tested

e.g. The average # TV sets in US homes is at
least 3 (H0: 3)

Begin with the assumption that the null

hypothesis is TRUE.
(Similar to the notion of innocent until proven guilty)

Refers to the Status Quo

Always contains the = sign
The Null Hypothesis may or may not be rejected.
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Chap. 8 - 3

The Alternative Hypothesis, H1

Is the opposite of the null hypothesis

e.g. The average # TV sets in US homes is
less than 3 (H1: < 3)

Challenges the Status Quo

Never contains the = sign

The Alternative Hypothesis may or may

not be accepted

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Chap. 8 - 4

Identify the Problem

Steps:
State the Null Hypothesis (H : 3)
0

State its opposite, the Alternative

Hypothesis (H1: < 3)
Hypotheses are mutually exclusive &
exhaustive
Sometimes it is easier to form the
alternative hypothesis first.

1999 Prentice-Hall, Inc.

Chap. 8 - 5

Hypothesis Testing Process

Assume the
population
mean age is 50.
(Null Hypothesis)

Is X 20 50?
No, not likely!

Population
The Sample
Mean Is 20

REJECT
Null Hypothesis
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Sample
Chap. 8 - 6

Reason for Rejecting H0

Sampling Distribution
It is unlikely
that we would
get a sample
mean of this
value ...

... Therefore, we
reject the null
hypothesis that
= 50.
... if in fact this were
the population mean.

20
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= 50

H0

Sample Mean
Chap. 8 - 7

Level of Significance,

Defines Unlikely Values of Sample Statistic

if Null Hypothesis Is True

Called Rejection Region of Sampling

Distribution

Designated (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

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Chap. 8 - 8

Level of Significance, and

the Rejection Region
H0: 3
H1: < 3
H0: 3
H1: > 3
H0: 3
H1: 3
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Rejection
Regions

Critical
Value(s)

/2

0
Chap. 8 - 9

Errors in Making Decisions

Type I Error
Reject True Null Hypothesis
Has Serious Consequences
Probability of Type I Error Is

Called Level of Significance

Type II Error
Do Not Reject False Null Hypothesis
Probability of Type II Error Is (Beta)

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Chap. 8 - 10

Result Possibilities
H0: Innocent
Jury Trial
Actual Situation

Hypothesis Test
Actual Situation

Verdict

Innocent Guilty Decision H0 True H0 False

Innocent

Do Not
Reject
H0

Guilty

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Correct
Error

Error

Correct Reject
H0

1-

Type II
Error ( )

Type I
Error
( )

Power
(1 - )

Chap. 8 - 11

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

1999 Prentice-Hall, Inc.

Chap. 8 - 12

Z-Test Statistics (Known)

Convert Sample Statistic (e.g.,
Standardized Z Variable
X X X
Z

X
n

)X
to

Test Statistic

Compare to Critical Z Value(s)

If Z test Statistic falls in Critical Region, Reject

H0; Otherwise Do Not Reject H0

1999 Prentice-Hall, Inc.

Chap. 8 - 13

p Value Test

Probability of Obtaining a Test Statistic More

Extreme or ) than Actual Sample Value
Given H0 Is True

Called Observed Level of Significance

Smallest Value of a H0 Can Be Rejected

Used to Make Rejection Decision

If p value Do Not Reject H0

If p value <, Reject H0

1999 Prentice-Hall, Inc.

Chap. 8 - 14

Hypothesis Testing: Steps

Test the Assumption that the true mean #
of TV sets in US homes is at least 3.
1.

State H0

H0 : 3

2.

State H1

H1 :

3.

Choose

= .05

4.

Choose n

n = 100

5.

Choose Test:

Z Test (or p Value)

1999 Prentice-Hall, Inc.

Chap. 8 - 15

Hypothesis Testing: Steps

(continued)

Test the Assumption that the average # 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

than 3 in the US
1999 Prentice-Hall, Inc.

The true mean # of TV set

households.

is less

Chap. 8 - 16

One-Tail Z Test for Mean

(Known)

Assumptions
Population Is Normally Distributed
If Not Normal, use large samples
Null Hypothesis Has or Sign Only

Z Test Statistic:

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x x
x
z

x
n
Chap. 8 - 17

Rejection Region
H0:
H1: < 0

H0: 0
H1: > 0

Reject H0

Reject H 0

Must Be Significantly
Below = 0
1999 Prentice-Hall, Inc.

Small values dont contradict H0

Dont Reject H0!
Chap. 8 - 18

Example: One Tail Test

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 to
be 15 grams. Test at the
0.05 level.
1999 Prentice-Hall, Inc.

368 gm.

H0: 368
H1: > 368
Chap. 8 - 19

Finding Critical Values:

One Tail
What Is Z Given = 0.05?
.50
-.05
.45

Z = 1
= .05

0 1.645 Z
Critical Value
= 1.645
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Standardized Normal
Probability Table (Portion)

.04

.05

.06

1.6 .5495 .5505 .5515

1.7 .5591 .5599 .5608
1.8 .5671 .5678 .5686
1.9 .5738 .5744 .5750
Chap. 8 - 20

Example Solution: One Tail

H0: 368
H1: > 368
= 0.025
n = 25
Critical Value: 1.645
Reject
.05

0 1.645 Z
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Test Statistic:

X
Z
1.50

n
Decision:
Do Not Reject at = .05
Conclusion:
No Evidence True Mean
Is More than 368
Chap. 8 - 21

p Value Solution
p Value is P(Z 1.50) = 0.0668
Use the
alternative
hypothesis
to find the
direction of
the test.

p Value

.0668

.9332

0 1.50
From Z Table:
Lookup 1.50
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1.0000
- .9332
.0668

Z
Z Value of Sample
Statistic
Chap. 8 - 22

p Value Solution
(p Value = 0.0668) ( = 0.05).
Do Not Reject.
p Value = 0.0668
Reject
= 0.05

1.50

Test Statistic Is In the Do Not Reject Region

1999 Prentice-Hall, Inc.

Chap. 8 - 23

Example: Two Tail Test

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
to be 15 grams. Test at the
0.05 level.

1999 Prentice-Hall, Inc.

368 gm.

H0: 368
H1: 368
Chap. 8 - 24

Example Solution: Two Tail

H0: 386
H1: 386

Test Statistic:

= 0.05
n = 25
Critical Value: 1.96
Reject
.025

.025
-1.96
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0 1.96

X 372.5 368
Z

1.50

15
n
25
Decision:
Do Not Reject at = .05
Conclusion:
No Evidence that True
Mean Is Not 368
Chap. 8 - 25

Connection to
Confidence Intervals

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

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Chap. 8 - 26

t-Test: Unknown
Assumptions
Population is normally distributed
If not normal, only slightly skewed & a large
sample taken

Parametric test procedure

t test statistic

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X
t
S
n
Chap. 8 - 27

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 15. Test at the 0.01
level.

is not
given,
1999 Prentice-Hall, Inc.

368 gm.

H0: 368
H1: 368
Chap. 8 - 28

Example:Z Test for Proportion

Problem: A marketing company claims
that it receives 4% responses from its
Mailing.
Approach: To test this claim, a random
sample of 500 were surveyed with 25
responses.
Solution: Test at the = .05 significance
level.
1999 Prentice-Hall, Inc.

Chap. 8 - 29

Z Test for Proportion:

Solution
H0: p .04
H1: p .04

Test Statistic:
p - ps
Z
p (1 - p)
n

= .05
n = 500

Critical Values: 1.96

Reject

Reject

.025

.025

0
1999 Prentice-Hall, Inc.

.04 -.05
=
= 1.14
.04 (1 - .04)
500

Decision:

Do not reject at = .05

Conclusion:

We do not have sufficient

evidence to reject the companys
claim of 4% response rate.
Chap. 8 - 30