Program

MBA

Semester

III

Subject Code

MB0050

Subject Name

Research Methodology

Unit Number

10

Unit Title

Testing of Hypothesis

Lecture Number :

10

Lecture Title

Testing of Hypothesis

Book Id

B1700

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Unit-10 Testing of Hypothesis

Testing of Hypothesis
Objectives :

Discuss the concepts used in the testing of hypothesis exercise.

Explain the steps used in testing of hypothesis exercise.

Explain the test of the significance of the mean of a single

population using both t and Z test.

Explain the test of the significance of difference between two

population means using t and Z tests.

Discuss the test of the significance of a single population

proportion.

Explain the test of the significance of the difference between two

population proportions using a Z test.

In this unit we will study the concepts and steps in the testing of
hypothesis exercise.
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Unit-10 Testing of Hypotheses

Lecture Outline
Introduction
Concepts in Testing of Hypothesis
Tests Concerning Means-the Case of Single Population
Tests for Difference between two Population Means

Tests Concerning Population Proportion- the Case of

Single Population
Tests for Difference between two Population
Proportions
Summary
Check Your Learning
Activity
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Unit-10 Testing of Hypotheses

Introduction

A hypothesis is an assumption or a statement that may or may

not be true.

The hypothesis is tested on the basis of information obtained from

a sample.

Instead of asking, for example, what the mean assessed value of

an apartment in a multistoried building is, one may be interested
in knowing whether or not the assessed value equals some
particular value, say `80 lakh.

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Unit-10 Testing of Hypotheses

Concepts in Testing of Hypothesis

Null hypothesis
The hypotheses that are proposed with the intent of receiving a rejection for
them are called null hypotheses.

Alternative hypotheses
Rejection of null hypotheses leads to the acceptance of alternative hypotheses.
The alternative hypotheses are denoted by H1.

One-tailed and two-tailed tests

A test is called one-sided (or one-tailed) only if the null hypothesis gets
rejected when a value of the test statistic falls in one specified tail of the
distribution. The test is called two tailed if null hypothesis gets rejected when a
value of the test statistic falls in either one or the other of the two tails of its
sampling distribution.
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Unit-10 Testing of Hypotheses

Concepts in Testing of Hypothesis

Steps in Testing of Hypothesis Exercise:

1. Setting up of a hypothesis

2. Setting up of a suitable significance level

3. Determination of critical region
4. Computing the value of test-statistic

5. Making decision

In case a hypothesis is rejected, the difference between the

sample statistic and the hypothesized population parameter is
considered to be significant.

If the hypothesis is accepted, the difference between the sample

statistic and the hypothesized population parameter is not
regarded as significant and can be attributed to chance.

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Unit-10 Testing of Hypotheses

Concepts in Testing of Hypothesis

Test Statistic for Testing Hypothesis about Population Mean

One of the important things that have to be kept in mind is the use of
an appropriate test statistic.

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Unit-10 Testing of Hypotheses

Tests Concerning Means-the Case

of Single Population
Case 1: Large Sample
Irrespective of the sample size n, if the value of the population standard deviation is known,
a Z test is appropriate. There can be alternate cases of two-tailed and one-tailed tests of
hypotheses.
The test statistic is given by:

Where,
= Sample mean
= Population standard deviation
H0 = Value of under the assumption that the null hypothesis is true
n = Size of sample

Corresponding to the null hypothesis H0 : = 0, the criteria shown in the table below can be
used.

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Unit-10 Testing of Hypotheses

Tests Concerning Means-the Case

of Single Population
Case 2: Small Sample
If the sample size is small (n <= 30) and is drawn from a population having a normal
population with unknown standard deviation , a t test is used to conduct the hypothesis for
the test of mean. The t distribution is a symmetrical distribution similar to the normal one.
However, t distribution is higher at the tail and lower at the peak, that is, the t distribution is
flatter than the normal distribution. With an increase in the sample size (and hence, the
degrees of freedom), t distribution loses its flatness and approaches the normal distribution
whenever n > 30.

Shape of t and Normal Distribution

The procedure for testing the hypothesis of a mean is similar to that explained for a large
sample. The test statistic used in this case is as follows:

Where,

(s = Sample standard deviation and n 1 = Degrees of freedom)

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Unit-10 Testing of Hypotheses

Tests for Difference between two

Population Means

Case of large sample:

In case both the sample sizes are greater than 30, a Z test is used. The
hypothesis to be tested may be written as:
H0 : 1 = 2
H1 : 1 2

Where, 1 = mean of population 1

2 = mean of population 2

Case of small sample:

If the size of both the samples is less than 30 and the population
standard deviation is unknown, the procedure described above to discuss
the equality of two population means is not applicable in the sense that a
t test would be applicable under the assumptions:
Two population variances are equal.
Two population variances are not equal.

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Unit-10 Testing of Hypotheses

Tests for Difference between two

Population Means

Case of large sample:

In case both the sample sizes are greater than 30, a Z test is used. The

hypothesis to be tested may be written as:

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Unit-10 Testing of Hypotheses

Tests for Difference between two

Population Means

Case of small sample:

If the size of both the samples is less than 30 and the population
standard deviation is unknown, the procedure described above to discuss
the equality of two population means is not applicable in the sense that a
t test would be applicable under the assumptions:
Two population variances are equal.
Two population variances are not equal.

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Unit-10 Testing of Hypotheses

Tests Concerning Population Proportion

the Case of Single Population

In the tests about proportion, one is interested in examining

whether the respondents possess a particular attribute or not.

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Unit-10 Testing of Hypotheses

Tests for Difference between two

Population Proportions

Here, the interest is to test whether the two population

proportions are equal or not. The hypothesis under investigation

is:

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Unit-10 Testing of Hypotheses

Summary

A hypothesis is a statement or an assumption regarding a population, which

may or may not be true.

The sequences of steps that need to be followed for the testing of

hypothesis are: setting up of a hypothesis, setting up of a suitable
significance level, determination of a test statistic, determination of critical
region, computing the value of test-statistic and making decision

In the test procedure for a single population mean or for examining the
equality of two population means, for large samples, a Z test is appropriate
whereas for the small samples, a t test is used under the two cases where:

population variances are equal and population variances are not equal.

In the testing procedures concerning the proportion of a single population

and the difference between two population proportions the hypotheses
concerning them are carried out using a Z test under the assumption that

the normal distribution could be used as an approximation to the binomial

distribution for a large sample.

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Unit-10 Testing of Hypotheses

Check Your Learning

1. The company XYZ manufacturing bulbs hypothesizes that the life of its
bulbs is 145 hours with a known standard deviation of 210 hours. A random
sample of 25 bulbs gave a mean life of 130 hours. Using a 0.05 level of
significance, can the company conclude that the mean life of bulbs is less
than the 145 hours?
Ans: A Z test will be used.
2. Average annual income of the employees of a company has been reported to
be `18,750. A random sample of 100 employees was taken. Then average
annual income was found to be `19,240 with a standard deviation of `2,610.
Test at 5 per cent level of significance whether the sample results are
representative of population results.
Ans: A Z test will be used.
3. If 54 out of a random sample of 150 boys smoke, while 31 out of random
sample of 100 girls smoke, can we conclude at the 0.05 level of significance
that the proportion of male smokers is higher than that of female smokers? Use
the 0.05 level of significance to test the null hypothesis that the prescribed
programme of exercise is not effective in reducing weight.

Ans: A Z test will be used.

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Unit-10 Testing of Hypotheses

Activity

It is believed that the proportion of male smokers is higher than

that of female smokers. To verify this, you may visit a coeducational college with a large number of students. Ask them
whether they smoke or not. Carry out an appropriate test to
examine the belief at 5% level of significance.

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