Hypothesis Testing for Population Means and Proportions

Chapter 10
One- and Two-Sample Test of Hypotheses
Walpole,Probability and Statistics for Engineers & Scientists, 8th e., Pearson Edu.
Chap 10-1
Hypothesis Testing Content
Formulate null and alternative hypotheses and

decision rules
Type I and Type II errors

Single Sample: Testing Population Mean,
Two Sample: Testing Difference two means
Tests on Proportion, p
Tests on Variance, 2
Goodness-of-Fit Test
Test for Independence
Chap 10-2
What is a Hypothesis?
A hypothesis is a claim
(assumption) about a
population parameter:
population mean
Example: The mean monthly cell phone bill
of this city is = $42
population proportion
Example: The proportion of adults in this
city with cell phones is p = .68
Chap 10-3
The Null Hypothesis, H0

States the assumption (numerical) to be
tested
Example: The average number of TV sets in
H0 : ) 3
homes is equal to three (
Is always about a population parameter,

not about a sample statistic
H0 : 3
H0 : X 3
Chap 10-4
The Null Hypothesis, H0

(continued)
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 = , or sign
May or may not be rejected
Chap 10-5
The Alternative Hypothesis, H1

Is the opposite of the null hypothesis
e.g., The average number of TV sets in homes
is not equal to 3 ( H1: 3 )
Challenges the status quo

Never contains the = , or sign
May or may not be proven
Is generally the hypothesis that the
researcher is trying to prove
Chap 10-6
Hypothesis Testing Process

Claim: the
population
mean age is 50.
(Null Hypothesis:
H0: = 50 )
Population
Is X 20 likely if = 50?
If not likely,
REJECT
Null Hypothesis
Suppose
the sample
mean age
is 20: X = 20
Now select a
random sample
Sample
Reason for Rejecting H0

Sampling Distribution of X
20
If it is unlikely that
we would get a
sample mean of
this value ...
= 50
If H0 is true
... if in fact this were

the population mean
... then we
reject the null
hypothesis that
= 50.
Chap 10-8
Level of Significance,
Defines the unlikely values of the sample
statistic if the null hypothesis is true
Defines rejection region of the sampling
distribution
Is designated by , (level of significance)
Typical values are .01, .05, or .10
Is selected by the researcher at the beginning
Provides the critical value(s) of the test
Chap 10-9
Level of Significance
and the Rejection Region
Level of significance =
H0: = 3
H1: 3
H0: 3
H1: > 3
H0: 3
H1: < 3
/2
Two-tail test
/2
Represents
critical value
Rejection
region is
shaded
Upper-tail test
Lower-tail test
0
Chap 10-10
Errors in Making Decisions

Type I Error
Reject a true null hypothesis
Considered a serious type of error
The probability of Type I Error is
Called level of significance of the test
Set by researcher in advance
Chap 10-11
Errors in Making Decisions

(continued)
Type II Error
Fail to reject a false null hypothesis
The probability of Type II Error is
Chap 10-12
Outcomes and Probabilities

Possible Hypothesis Test Outcomes
Decision
Key:
Outcome
(Probability)
Actual
Situation
H0 True
H0 False
Do Not
Reject
H0
No error
(1 - )
Type II Error
()
Reject
H0
Type I Error
()
No Error
(1-)
Chap 10-13
Type I & II Error Relationship

Type I and Type II errors can not happen at
the same time
Type I error can only occur if H0 is true
Type II error can only occur if H0 is false

If Type I error probability ( )
, then
Type II error probability ( )

Chap 10-14
Factors Affecting Type II Error

All else equal,

when the difference between
hypothesized parameter and its true value
when
when
when
Chap 10-15
Review: 10 Steps in
Hypothesis Testing
1. State the null hypothesis, H0
2. State the alternative hypotheses, H1
3. Choose the level of significance,
4. Choose the sample size, n
5. Determine the appropriate statistical
technique and the test statistic to use
6. Find the critical values and determine the
rejection region(s)
Chap 10-16
Review: 10 Steps in
Hypothesis Testing
7. Collect data and compute the test statistic
from the sample result
8. Compare the test statistic to the critical
value to determine whether the test statistics
falls in the region of rejection
9. Make the statistical decision: Reject H0 if the
test statistic falls in the rejection region
10. Express the decision in the context of the
problem
Chap 10-17
Hypothesis Tests for the Mean

Hypothesis
Tests for
Known
Unknown
Chap 10-18
10.5 Single Sample: Test of Hypothesis

for Single Mean ( Known)
Convert sample statistic ( X ) to a Z test statistic
Hypothesis
Tests for
Known
Unknown
The test statistic is:
X
Z
n
Chap 10-19
Critical Value
Approach to Testing
For two tailed test for the mean, known:
Convert sample statistic ( X) to test statistic (Z
statistic )
Determine the critical Z values for a specified
level of significance from a table or computer
Decision Rule: If the test statistic falls in the
rejection region, reject H0 ; otherwise do not
reject H0
Chap 10-20
Hypothesis Testing Example

Test the claim that the true mean # of TV
sets in homes is equal to 3.
(Assume = 0.8)
1-2. State the appropriate null and alternative
hypotheses
H0: = 3
H1: 3 (This is a two tailed test)
3. Specify the desired level of significance
Suppose that = .05 is chosen for this test
4. Choose a sample size
Suppose a sample of size n = 100 is selected
Chap 10-21

(continued)
5. Determine the appropriate technique

is known so this is a Z test
6. Set up the critical values
For = .05 the critical Z values are 1.96
7. Collect the data and compute the test statistic
Suppose the sample results are
n = 100, X = 2.84 ( = 0.8 is assumed known)
So the test statistic is:
Z
X
2.84 3
.16
2.0
0.8
.08
n
100
Chap 10-22

(continued)
8. Is the test statistic in the rejection region?

= .05/2
Reject H0 if
Z < -1.96 or
Z > 1.96;
otherwise
do not
reject H0
Reject H0
-Z= -1.96
= .05/2
Do not reject H0
Reject H0
+Z= +1.96
Here, Z = -2.0 < -1.96, so the

test statistic is in the rejection
region
Chap 10-23

(continued)
9-10. Reach a decision and interpret the result

= .05/2
Reject H0
-Z= -1.96
= .05/2
Do not reject H0
Reject H0
+Z= +1.96
-2.0
Since Z = -2.0 < -1.96, we reject the null hypothesis

and conclude that there is sufficient evidence that the
mean number of TVs in US homes is not equal to 3
Chap 10-24
p-Value Approach to Testing

p-value: Probability of obtaining a test
statistic more extreme ( or ) than the
observed sample value given H0 is true
Also called observed level of significance
Smallest value of for which H0 can be
rejected
Chap 10-25
p-Value Approach to Testing

(continued)
Convert Sample Statistic (e.g., X ) to Test

Statistic (e.g., Z statistic )
Obtain the p-value from a table or computer
Compare the p-value with
If p-value < , reject H0
If p-value , do not reject H0
Chap 10-26
p-Value Example
Example: How likely is it to see a sample mean of
2.84 (or something further from the mean, in either
direction) if the true mean is = 3.0?
X = 2.84 is translated
to a Z score of Z = -2.0
P(Z 2.0) .0228
P(Z 2.0) .0228
/2 = .025
/2 = .025
.0228
.0228
p-value
=.0228 + .0228 = .0456
-1.96
-2.0
1.96
2.0
Z
Chap 10-27
p-Value Example
Compare the p-value with
(continued)
If p-value < , reject H0

If p-value , do not reject H0
Here: p-value = .0456
= .05
Since .0456 < .05, we
reject the null
hypothesis
/2 = .025
/2 = .025
.0228
.0228
-1.96
-2.0
1.96
2.0
Z
Chap 10-28
Connection to Confidence Intervals

For X = 2.84, = 0.8 and n = 100, the 95%
confidence interval is:
0.8
2.84 - (1.96)
to
100
0.8
2.84 (1.96)
100
2.6832 2.9968
Since this interval does not contain the hypothesized
mean (3.0), we reject the null hypothesis at = .05
Two-Tail Tests
There are two
cutoff values
(critical values),
defining the
regions of
rejection
H0: = 3
H1 :
3
/2
/2
X
3
Reject H0
-Z
Lower
critical
value
Do not reject H0
Reject H0
+Z
Upper
critical
value
Chap 10-30
One-Tail Tests
In many cases, the alternative hypothesis
focuses on a particular direction
H0: 3
H1: < 3
H0: 3
H1: > 3
This is a lower-tail test since the

alternative hypothesis is focused on
the lower tail below the mean of 3
This is an upper-tail test since the
alternative hypothesis is focused on
the upper tail above the mean of 3
Chap 10-31
Lower-Tail Tests
There is only one
critical value, since
the rejection area is
in only one tail
H0: 3
H1: < 3
Reject H0
-Z
Do not reject H0
Z
X
Critical value
Chap 10-32
Upper-Tail Tests
There is only one
critical value, since
the rejection area is
in only one tail
H0: 3
H1: > 3
Do not reject H0
Reject H0
Critical value
Chap 10-33
Example: Upper-Tail Z Test

for Mean ( Known)
A phone industry manager thinks that
customer monthly cell phone bill have
increased, and now average over $52 per
month. The company wishes to test this
claim. (Assume = 10 is known)
Form hypothesis test:
H0: 52 the average is not over $52 per month
H1: > 52
the average is greater than $52 per month

(i.e., sufficient evidence exists to support the
managers claim)
Chap 10-34
Example: Find Rejection Region

(continued)
Suppose that = .10 is chosen for this test

Find the rejection region:
Reject H0
= .10
Do not reject H0
1.28
Reject H0
Reject H0 if Z > 1.28

Chap 10-35
Review:
One-Tail Critical Value
What is Z given = 0.10?
.90
.10
= .10
.90
Standard Normal
Distribution Table (Portion)
0 1.28
.07
.08
.09
1.1 .8790 .8810 .8830

1.2 .8980 .8997 .9015
1.3 .9147 .9162 .9177
Critical Value
= 1.28
Chap 10-36
Example: Test Statistic

(continued)
Obtain sample and compute the test statistic

Suppose a sample is taken with the following
results: n = 64, X = 53.1 (=10 was assumed known)
Then the test statistic is:
X
53.1 52
Z
0.88
10
n
64
Chap 10-37
Example: Decision
(continued)
Reach a decision and interpret the result:

Reject H0
= .10
Do not reject H0
1.28
0
Z = .88
Reject H0
Do not reject H0 since Z = 0.88 1.28

i.e.: there is not sufficient evidence that the
mean bill is over $52
Chap 10-38
p -Value Solution
Calculate the p-value and compare to
(continued)
(assuming that = 52.0)
p-value = .1894
Reject H0
= .10
0
Do not reject H0
1.28
Z = .88
Reject H0
P( X 53.1)
53.1 52.0
P Z
10/ 64
P(Z 0.88) 1 .8106

.1894
Do not reject H0 since p-value = .1894 > = .10

Chap 10-39
10.7 Single Sample: Test of Hypothesis

for Single Mean ( Unknown)
Convert sample statistic ( X ) to a t test statistic
Hypothesis
Tests for
Known
Unknown
t n-1
S
n
Chap 10-40
Example: Two-Tail Test ( Unknown)

The average cost of a
hotel room in New York
is said to be $168 per
night. A random sample
of 25 hotels resulted in
X = $172.50 and
S = $15.40. Test at the
= 0.05 level.
H0: = 168
H1:
168
(Assume the population distribution is normal)

Chap 10-41
Solution: Two-Tail Test

H0: = 168
H1:
168
= 0.05
/2=.025
Reject H0
-t n-1,/2
-2.0639
n = 25
is unknown, so
use a t statistic
Critical Value:
t24 = 2.0639
t n1
/2=.025
Do not reject H0
1.46
Reject H0
t n-1,/2
2.0639
X
172.50 168
1.46
S
15.40
n
25
Do not reject H0: not sufficient evidence that

true mean cost is different than $168
Chap 10-42
Connection to Confidence Intervals

For X = 172.5, S = 15.40 and n = 25, the 95%
confidence interval is:
172.5 - (2.0639) 15.4/ 25
to 172.5 + (2.0639) 15.4/ 25
166.14 178.86
Since this interval contains the Hypothesized mean (168),
we do not reject the null hypothesis at = .05
10.8 Two Samples: Tests on Two

Means
Population means,
independent
samples
1 and 2 known
1 and 2 unknown
Goal: Test hypotheses or form

a confidence interval for the
difference between two
population means, 1 2
The point estimate for the
difference is
X1 X2
Chap 10-44
Independent Samples
Population means,
independent
samples
Different data sources

Unrelated
Independent
Sample selected from one
population has no effect on
the sample selected from
the other population
1 and 2 known
1 and 2 unknown
Use the difference between 2

sample means
Use Z test or pooled variance
t test
Chap 10-45
Difference Between Two Means

Population means,
independent
samples
1 and 2 known
Use a Z test statistic
1 and 2 unknown
Use S to estimate unknown

, use a t test statistic and
pooled standard deviation
Chap 10-46
1 and 2 Known
Population means,
independent
samples
1 and 2 known
1 and 2 unknown
Assumptions:
Samples are randomly and

independently drawn
population distributions are
normal or both sample sizes
are 30
Population standard
deviations are known
Chap 10-47
1 and 2 Known
(continued)
Population means,
independent
samples
1 and 2 known
When 1 and 2 are known and

both populations are normal or
both sample sizes are at least 30,
the test statistic is a Z-value
and the standard error of

X1 X2 is
1 and 2 unknown
X1 X2
2
1
n1
n2
Chap 10-48
1 and 2 Known
(continued)
Population means,
independent
samples
1 and 2 known
The test statistic for

1 2 is:
X
Z
1 and 2 unknown
X 2 1 2
2
1
n1
n2
Chap 10-49
Hypothesis Tests for

Two Population Means
Two Population Means, Independent Samples
Lower-tail test:
Upper-tail test:
Two-tail test:
H0: 1 2
H1: 1 < 2
H0: 1 2
H1: 1 > 2
H0: 1 = 2
H1: 1 2
i.e.,
i.e.,
i.e.,
H0: 1 2 0
H1: 1 2 < 0
H0: 1 2 0
H1: 1 2 > 0
H0: 1 2 = 0
H1: 1 2 0
Chap 10-50
Hypothesis tests for 1 2

Two Population Means, Independent Samples
Lower-tail test:
Upper-tail test:
Two-tail test:
H0: 1 2 0
H1: 1 2 < 0
H0: 1 2 0
H1: 1 2 > 0
H0: 1 2 = 0
H1: 1 2 0
-z
Reject H0 if Z < -Z
z
Reject H0 if Z > Z
/2
-z/2
/2
z/2
Reject H0 if Z < -Z/2

or Z > Z/2
Chap 10-51
1 and 2 Unknown
Assumptions:
Population means,
independent
samples
Samples are randomly and

independently drawn
1 and 2 known
1 and 2 unknown
Populations are normally

distributed or both sample
sizes are at least 30
Population variances are
unknown but assumed equal
Chap 10-52
1 and 2 Unknown
(continued)
Forming interval
estimates:
Population means,
independent
samples
1 and 2 known
1 and 2 unknown
The population variances

are assumed equal, so use
the two sample standard
deviations and pool them to
estimate
the test statistic is a t value
with (n1 + n2 2) degrees
of freedom
Chap 10-53
1 and 2 Unknown
(continued)
Population means,
independent
samples
The pooled standard

deviation is
1 and 2 known
1 and 2 unknown
Sp
n1 1 S12 n2 1 S2 2
(n1 1) (n2 1)
Chap 10-54
1 and 2 Unknown
(continued)

1 2 is:
Population means,
independent
samples
X
t
1 and 2 known
1 and 2 unknown
X 2 1 2
1 1
S

n1 n2
2
p
Where t has (n1 + n2 2) d.f.,

and
S
2
p
2
2
n1 1 S1 n2 1 S 2
(n1 1) (n2 1)
Chap 10-55
Pooled Sp t-Test: Example

You are a financial analyst for a brokerage firm. Is there
a difference in dividend yield between stocks listed on the
NYSE & NASDAQ? You collect the following data:
NYSE
Number
21
Sample mean
3.27
Sample std dev 1.30
NASDAQ
25
2.53
1.16
Assuming both populations are

approximately normal with
equal variances, is
there a difference in average
yield ( = 0.05)?
Chap 10-56
Calculating the Test Statistic

X
t
X 2 1 2
1 1
S

n1 n2
2
p
3.27 2.53 0
1
1
1.5021
21 25
2
2
2
2
1
S
1
S
21
1
1.30
25
1
1.16
1
2
2
S2 1
(n1 1) (n2 1)
(21 - 1) (25 1)
2.040
1.5021
Chap 10-57
Solution
H0: 1 - 2 = 0 i.e. (1 = 2)
Reject H0
Reject H0
H1: 1 - 2 0 i.e. (1 2)
= 0.05
df = 21 + 25 - 2 = 44
Critical Values: t = 2.0154
.025
-2.0154
.025
0 2.0154
2.040
Decision:
Test Statistic:
3.27 2.53
t
2.040 Reject H0 at = 0.05
1
1
1.5021
Conclusion:
21 25
There is evidence of a
difference in means.
Chap 10-58
Paired Observations
Tests Means of 2 Related Populations
Related
samples
Paired or matched samples

Repeated measures (before/after)
Use difference between paired values:
D = X1 - X2
Eliminates Variation Among Subjects
Assumptions:
Both Populations Are Normally Distributed
Or, if Not Normal, use large samples
Chap 10-59
Mean Difference, D Known

The ith paired difference is Di , where
Related
samples
Di = X1i - X2i
The point estimate for
the population mean
paired difference is D :
D
i 1
Suppose the population

standard deviation of the
difference scores, D, is known
n is the number of pairs in the paired sample
Chap 10-60
Mean Difference, D Known

(continued)
Paired
samples
The test statistic for the mean

difference is a Z value:
D D
Z
D
n
Where
D = hypothesized mean difference
D = population standard dev. of differences
n = the sample size (number of pairs)
Chap 10-61
Confidence Interval, D Known

Paired
samples
The confidence interval for D is
D
DZ
n
Where
n = the sample size
(number of pairs in the paired sample)
Chap 10-62
Mean Difference, D Unknown

Related
samples
If D is unknown, we can estimate the

unknown population standard deviation
with a sample standard deviation:
The sample standard
deviation is
SD
2
(D
D
)
i
i1
n 1
Chap 10-63

(continued)
Paired
samples
The test statistic for D is now a

t statistic, with n-1 d.f.:
D D
t
SD
n
n
Where t has n - 1 d.f.

and SD is:
SD
(D
i 1
D)
n 1
Chap 10-64
Confidence Interval, D Unknown

Paired
samples
The confidence interval for D is
SD
D t n1
n
n
where
SD
(D D)
i1
n 1
Chap 10-65
Hypothesis Testing for

Paired Samples
Lower-tail test:
Upper-tail test:
Two-tail test:
H0: D 0
H1: D < 0
H0: D 0
H1: D > 0
H0: D = 0
H1: D 0
-t
Reject H0 if t < -t
t
Reject H0 if t > t
Where t has n - 1 d.f.
/2
-t/2
/2
t/2
Reject H0 if t < -t
or t > t
Chap 10-66
Paired Samples Example

Assume you send your salespeople to a customer
service training workshop. Is the training effective?
You collect the following data:
Number of Complaints:
(2) - (1)
Salesperson Before (1) After (2)
Difference, Di
C.B.
T.F.
M.H.
R.K.
M.O.
6
20
3
0
4
4
6
2
0
0
- 2
-14
- 1
0
- 4
-21
D =
Di
n
= -4.2
SD
(D D)
n 1
5.67
Chap 10-67
Paired Samples: Solution

Has the training made a difference in the number of
complaints (at the 0.01 level)?

H0: D = 0
H1: D 0
= .01
D = - 4.2
Critical Value = 4.604

d.f. = n - 1 = 4
SD / n
4.2 0
5.67/ 5
Reject
/2
/2
- 4.604
4.604
- 1.66
Decision: Do not reject H0

(t stat is not in the reject region)
Test Statistic:
D D
Reject
1.66
Conclusion: There is not a

significant change in the
number of complaints.
Chap 10-68
10.11 One Sample: Test on Proportion

Involves categorical variables
Two possible outcomes
Success (possesses a certain characteristic)
Failure (does not possesses that characteristic)
Fraction or proportion of the population in the

success category is denoted by p
Chap 10-69
Proportions
(continued)
Sample proportion in the success category is

denoted by ps
X number of successes in sample
ps n
sample size
When both np and n(1-p) are at least 5, ps

can be approximated by a normal distribution
with mean and standard deviation
p(1 p)
p s p
ps
n
Chap 10-70
Hypothesis Tests for Proportions

The sampling
distribution of ps is
approximately
normal, so the test
statistic is a Z value:
ps p
p(1 p)
n
Hypothesis
Tests for p
np 5
and
n(1-p) 5
np < 5
or
n(1-p) < 5
-Binomial dist., if p is common.
-Poisson dist., If p is very close
to 0 or 1.
Chap 10-71
Example: Z Test for Proportion

A marketing company
claims that it receives
8% responses from its
mailing. To test this
claim, a random sample
of 500 were surveyed
with 25 responses. Test
at the = .05
significance level.
Check:
n p = (500)(.08) = 40
n(1-p) = (500)(.92) = 460
Chap 10-72
Z Test for Proportion: Solution

Test Statistic:
H0: p = .08
H1: p .
08= .05
n = 500, ps = .05
ps p
p(1 p)
n
Decision:
Critical Values: 1.96

Reject
Reject
.025
.025
-1.96
1.96
.05 .08
2.47
.08(1 .08)
500
-2.47
Reject H0 at = .05
Conclusion:
There is sufficient
evidence to reject the
companys claim of 8%
response rate.
Chap 10-73
p-Value Solution
(continued)
Calculate the p-value and compare to

(For a two sided test the p-value is always two sided)
Do not reject H0
Reject H0
/2 = .025
Reject H0
p-value = .0136:
/2 = .025
P(Z 2.47) P(Z 2.47)

.0068
.0068
-1.96
Z = -2.47
2(.0068) 0.0136
1.96
Z = 2.47
Reject H0 since p-value = .0136 < = .05

Chap 10-74
10.12 Two Population Proportions

Population
proportions
Goal: test a hypothesis or form a

confidence interval for the difference
between two population proportions,
p1 p2
Assumptions:
n1p1 5 , n1(1-p1) 5
n2p2 5 , n2(1-p2) 5
The point estimate for
the difference is
ps1 ps2
Chap 10-75
Two Population Proportions

Population
proportions
Since we begin by assuming the null

hypothesis is true, we assume p1 = p2
and pool the two ps estimates
The pooled estimate for the
overall proportion is:
X1 X 2
p
n1 n2
where X1 and X2 are the numbers from
samples 1 and 2 with the characteristic of
interest
Chap 10-76

(continued)

p1 p2 is a Z statistic:
Population
proportions
p
Z
where
s1
p s2 p1 p 2
1 1
p (1 p)

n1 n2
X1 X 2
X
X
, p s1 1 , p s2 2
n1 n2
n1
n2
Chap 10-77

Population proportions
Lower-tail test:
Upper-tail test:
Two-tail test:
H0: p1 p2
H1: p1 < p2
H0: p1 p2
H1: p1 > p2
H0: p1 = p2
H1: p1 p2
i.e.,
i.e.,
i.e.,
H0: p1 p2 0
H1: p1 p2 < 0
H0: p1 p2 0
H1: p1 p2 > 0
H0: p1 p2 = 0
H1: p1 p2 0
Chap 10-78

(continued)
Population proportions
Lower-tail test:
Upper-tail test:
Two-tail test:
H0: p1 p2 0
H1: p1 p2 < 0
H0: p1 p2 0
H1: p1 p2 > 0
H0: p1 p2 = 0
H1: p1 p2 0
-z
Reject H0 if Z < -Z
z
Reject H0 if Z > Z
/2
-z/2
/2
z/2
Reject H0 if Z < -Z
or Z > Z
Chap 10-79
Example:
Two population Proportions
Is there a significant difference between the
proportion of men and the proportion of
women who will vote Yes on Proposition A?
In a random sample, 36 of 72 men and 31 of

50 women indicated they would vote Yes
Test at the .05 level of significance
Chap 10-80
Example:
(continued)
The hypothesis test is:

H0: p1 p2 = 0 (the two proportions are equal)
H1: p1 p2 0 (there is a significant difference between proportions)
The sample proportions are:
Men:
ps1 = 36/72 = .50
Women:
ps2 = 31/50 = .62
The pooled estimate for the overall proportion is:
X1 X 2 36 31 67
p
.549
n1 n2
72 50 122
Chap 10-81
Example:
(continued)
The test statistic for p1 p2 is:

z
s1
p s2 p1 p 2
1 1

n1 n2
p (1 p)
.50 .62 0
1
1
72
50
Reject H0
Reject H0
.025
.025
-1.96
-1.31
1.31
.549 (1 .549)
Critical Values = 1.96

For = .05
1.96
Decision: Do not reject H0

Conclusion: There is not
significant evidence of a
difference in proportions
who will vote yes between
men and women.
Chap 10-82
10.12 Tests 0n Variances

The Chi-square test statistic is:
2
(
n
1
)
s
2

2
0
where:
o2 = value of 2 given by the null hypotheses.
n = sample size.
(Assumed: the null hypothesis Ho that the

population variance equals a spesified value o2
Chap 10-83
Decision Rule
The 2 test statistic approximately follows a chisquared distribution with one degree of freedom
Decision Rule:
If 2 > 2U, reject H0,
otherwise, do not
reject H0
Do not
reject H0
Reject H0
2U
Chap 10-84
Two-Sample Tests for Variances

Tests for Two
Population
Variances
F test statistic
H0: 12 = 22
H1: 12 22
Two-tail test
H0: 12 22
H1: 12 < 22
Lower-tail test
H0: 12 22
H1: 12 > 22
Upper-tail test
Chap 10-85
Hypothesis Tests for Variances

(continued)
Tests for Two

Population
Variances
F test statistic
The F test statistic is:

2
1
2
2
S
F
S
S12 = Variance of Sample 1
n1 - 1 = numerator degrees of freedom
S 22 = Variance of Sample 2
n2 - 1 = denominator degrees of freedom
Chap 10-86
The F Distribution
The F critical value is found from the F table
The are two appropriate degrees of freedom:
numerator and denominator
S12
F 2
S2
where
df1 = n1 1 ; df2 = n2 1
In the F table,
numerator degrees of freedom determine the column
denominator degrees of freedom determine the row
Chap 10-87
Finding the Rejection Region

H0: 12 22
H1: 12 < 22
/2
0
Reject
H0
FL
Do not
reject H0
Reject
H0
FU
Reject H0
FL
Do not
reject H0
FU
rejection
region for a
two-tail test is:
Do not
reject H0
/2
Reject H0 if F < FL
H0: 12 22
H1: 12 > 22
0
H0: 12 = 22
H1: 12 22
Reject H0
S12
F 2 FU
S2
S12
F 2 FL
S2
Reject H0 if F > FU
Chap 10-88
Finding the Rejection Region

(continued)
/2
H0: 12 = 22
H1: 12 22
/2
Reject
H0
To find the critical F values:

1. Find FU from the F table
for n1 1 numerator and
n2 1 denominator
degrees of freedom
FL
Do not
reject H0
FU
Reject H0
2. Find FL using the formula: FL
1
FU*
Where FU* is from the F table with

n2 1 numerator and n1 1
denominator degrees of freedom
(i.e., switch the d.f. from FU)
Chap 10-89
F Test: An Example
You are a financial analyst for a brokerage firm. You want
to compare dividend yields between stocks listed on the
NYSE & NASDAQ. You collect the following data :
NYSE
NASDAQ
Number
2125
Mean
3.272.53
Std dev
1.301.16
Is there a difference in the
variances between the
NYSE
& NASDAQ at the = 0.05 level?
Chap 10-90
F Test: Example Solution

Form the hypothesis test:
H0: 21 22 = 0 (there is no difference between variances)
H1: 21 22 0 (there is a difference between variances)
Find the F critical values for = .05:
FU:
Numerator:
FL:
Numerator:
n1 1 = 21 1 = 20 d.f.
Denominator:
n2 1 = 25 1 = 24 d.f.
Denominator:
n2 1 = 25 1 = 24 d.f.
FU = F.025, 20, 24 = 2.33
n1 1 = 21 1 = 20 d.f.
FL = 1/F.025, 24, 20 = 1/2.41

= .41
Chap 10-91
F Test: Example Solution

(continued)

2
1
2
2
H0: 12 = 22
H1: 12 22
S
1.30
F
1.256
2
S
1.16
/2 = .025
0
Reject H0
/2 = .025
Do not
reject H0
Reject H0
FU=2.33
F = 1.256 is not in the
FL=0.41
rejection region, so we do not
reject H0
Conclusion: There is not sufficient evidence
of a difference in variances at = .05
Chap 10-92
10.14 Goodness-of-Fit Test

2
(
f
f
)
2 o e
fe
all cells
where:
fo = observed frequency in a particular cell
fe = expected frequency in a particular cell if H0 is true
2 for the 2 x 2 case has 1 degree of freedom
(Assumed: each cell in the contingency table has expected
frequency of at least 5)
Chap 10-93
Decision Rule
The 2 test statistic approximately follows a chisquared distribution with one degree of freedom
Decision Rule:
otherwise, do not
reject H0
Do not
reject H0
Reject H0
2U
Chap 10-94
Computing the Average Proportion

X1 X 2 X
The average
p
proportion is:
n1 n2
n
120 Females, 12
were left handed
180 Males, 24 were
left handed
Here:
12 24
36
p
0.12
120 180 300
i.e., the proportion of left handers overall is 12%
Chap 10-95
Finding Expected Frequencies

To obtain the expected frequency for left handed
females, multiply the average proportion left handed (p)
by the total number of females
To obtain the expected frequency for left handed males,
multiply the average proportion left handed (p) by the
total number of males
If the two proportions are equal, then
P(Left Handed | Female) = P(Left Handed | Male) = .12
i.e., we would expect (.12)(120) = 14.4 females to be left handed
(.12)(180) = 21.6 males to be left handed
Chap 10-96
Observed vs. Expected Frequencies
Hand Preference
Gender
Left
Right
Female
Observed = 12
Expected = 14.4
Observed = 108
Expected = 105.6
120
Male
Observed = 24
Expected = 21.6
Observed = 156
Expected = 158.4
180
36
264
300
Chap 10-97
Chi-Square Test Statistic

Hand Preference
Gender
Left
Right
Female
Observed = 12
Expected = 14.4
Observed = 108
Expected = 105.6
120
Male
Observed = 24
Expected = 21.6
Observed = 156
Expected = 158.4
180
36
264
300

( fo fe )2

fe
all cells
2
(12 14.4)2 (108 105.6)2 (24 21.6)2 (156 158.4)2
0.6848
14.4
105.6
21.6
158.4
Chap 10-98
Decision Rule
The test statistic is 2 0.6848 , U2 with 1 d.f. 3.841
Decision Rule:
If 2 > 3.841, reject H0,
otherwise, do not reject H0
Do not
reject H0
Reject H0
2U=3.841
Here,
2 = 0.6848 < 2U = 3.841,
so we do not reject H0
and conclude that there is
not sufficient evidence
that the two proportions
are different at = .05
Chap 10-99
10.15 Test for Independence

Similar to the 2 test for equality of more than
two proportions, but extends the concept to
contingency tables with r rows and c columns
H0: The two categorical variables are independent
(i.e., there is no relationship between them)
H1: The two categorical variables are dependent
(i.e., there is a relationship between them)
Chap 10-100
2 Test of Independence
(continued)

2
(
f
f
)
2 o e
fe
all cells
where:
fo = observed frequency in a particular cell of the r x c table
2 for the r x c case has (r-1)(c-1) degrees of freedom
Chap 10-101
Expected Cell Frequencies

Expected cell frequencies:
row total column total

fe
n
Where:
row total = sum of all frequencies in the row
column total = sum of all frequencies in the column
n = overall sample size
Chap 10-102
Decision Rule
The decision rule is
Where 2U is from the chi-squared distribution
with (r 1)(c 1) degrees of freedom
Chap 10-103
Example
The meal plan selected by 200 students is shown below:
Number of meals per week
20/week 10/week
Class
Standing
Fresh.
24
32
none
Total
14
70
Soph.
22
26
12
60
Junior
10
14
30
Senior
14
16
10
40
Total
70
88
42
200
Chap 10-104
Example
(continued)
The hypothesis to be tested is:
H0: Meal plan and class standing are independent

(i.e., there is no relationship between them)
H1: Meal plan and class standing are dependent
(i.e., there is a relationship between them)
Chap 10-105
Example:
Expected Cell Frequencies
(continued)
Observed:
Number of meals
per week
Class
Standing
20/wk
10/wk
Expected cell
frequencies if H0 is true:
none
Total
Fresh.
24
32
14
70
Soph.
22
26
12
60
Junior
10
14
30
Senior
14
16
10
40
Class
Standing
Total
70
88
42
200
Fresh.
24.5
30.8
14.7
70
Soph.
21.0
26.4
12.6
60
Junior
10.5
13.2
6.3
30
Senior
14.0
17.6
8.4
40
70
88
42
200
Example for one cell:

fe
row total column total

n
30 70
10.5
200
Number of meals
per week
Total
20/wk
10/wk
none
Total
Chap 10-106
Example: The Test Statistic

(continued)
The test statistic value is:

2
(
f
f
)
2 o e
fe
all cells
(24 24.5)2 (32 30.8)2

(10 8.4)2
0.709
24.5
30.8
8. 4
2U = 12.592 for = .05 from the chi-squared

distribution with (4 1)(3 1) = 6 degrees of
freedom
Chap 10-107
Example:
Decision and Interpretation
(continued)
The test statistic is 2 0.709 , U2 with 6 d.f. 12.592

Decision Rule:
If 2 > 12.592, reject H0,
Do not
reject H0
Reject H0
2U=12.592
Here,
2 = 0.709 < 2U = 12.592,
so do not reject H0
Conclusion: there is not
sufficient evidence that meal
plan and class standing are
related at = .05
Chap 10-108
10.17 Testing for Proportions

Extend the 2 test to the case with more than
two independent populations:
H 0: p 1 = p 2 = = p c
H1: Not all of the pj are equal (j = 1, 2, , c)
Chap 10-109
The Chi-Square Test Statistic

2
(
f
f
)
2 o e
fe
all cells
where:
fo = observed frequency in a particular cell of the 2 x c table
2 for the 2 x c case has (2-1)(c-1) = c - 1 degrees of freedom
Chap 10-110
Computing the Overall Proportion

The overall
proportion is:
X1 X 2 Xc X
p
n1 n2 nc
n
Expected cell frequencies for the c categories

are calculated as in the 2 x 2 case, and the
decision rule is the same:
Decision Rule:
otherwise, do not
reject H0
Where 2U is from the

chi-squared distribution
with c 1 degrees of
freedom
Chap 10-111
Using PHStat
Options
Chap 10-112
Sample PHStat Output
Input
Output
Chap 10-113
Two-Sample Tests in EXCEL

For independent samples:
Independent sample Z test with variances known:
Tools | data analysis | z-test: two sample for means
For paired samples (t test):

Tools | data analysis | t-test: paired two sample for means
For variances
F test for two variances:
Tools | data analysis | F-test: two sample for variances
Chap 10-114
Two-Sample Tests in PHStat
Chap 10-115
Input
Output
Chap 10-116

(continued)
Input
Output
Chap 10-117
Chapter Summary
Addressed hypothesis testing methodology
Performed Z Test for the mean ( known)
Discussed critical value and pvalue approaches to
hypothesis testing
Performed one-tail and two-tail tests
Performed t test for the mean ( unknown)
Performed Z test for the proportion
Chap 10-118
Chapter Summary
Compared two independent samples

Performed Z test for the differences in two means
Performed pooled variance t test for the differences in two means
Formed confidence intervals for the differences between two means
Compared two related samples (paired samples)

Performed paired sample Z and t tests for the mean difference
Formed confidence intervals for the paired difference
Compared two population proportions

Formed confidence intervals for the difference between two population
proportions
Performed Z-test for two population proportions
Performed F tests for the difference between two population

variances
Used the F table to find F critical values
Chap 10-119

Hypothesis Testing for Population Means and Proportions

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Chapter 10

One- and Two-Sample Test of Hypotheses

Hypothesis Testing Content

Formulate null and alternative hypotheses and

Type I and Type II errors

The Null Hypothesis, H0

Is always about a population parameter,

The Null Hypothesis, H0

Begin with the assumption that the null

The Alternative Hypothesis, H1

Challenges the status quo

Hypothesis Testing Process

Reason for Rejecting H0

... if in fact this were

Errors in Making Decisions

Errors in Making Decisions

Outcomes and Probabilities

Type I & II Error Relationship

Type I error can only occur if H0 is true

Type II error can only occur if H0 is false

Type II error probability ( )

Factors Affecting Type II Error

Hypothesis Tests for the Mean

10.5 Single Sample: Test of Hypothesis

The test statistic is:

Hypothesis Testing Example

Hypothesis Testing Example

5. Determine the appropriate technique

Hypothesis Testing Example

8. Is the test statistic in the rejection region?

Here, Z = -2.0 < -1.96, so the

Hypothesis Testing Example

9-10. Reach a decision and interpret the result

Since Z = -2.0 < -1.96, we reject the null hypothesis

p-Value Approach to Testing

p-Value Approach to Testing

Convert Sample Statistic (e.g., X ) to Test

If p-value < , reject H0

Connection to Confidence Intervals

This is a lower-tail test since the

Example: Upper-Tail Z Test

the average is greater than $52 per month

Example: Find Rejection Region

Suppose that = .10 is chosen for this test

Reject H0 if Z > 1.28

1.1 .8790 .8810 .8830

Example: Test Statistic

Obtain sample and compute the test statistic

Reach a decision and interpret the result:

Do not reject H0 since Z = 0.88 1.28

(assuming that = 52.0)

P(Z 0.88) 1 .8106

Do not reject H0 since p-value = .1894 > = .10

10.7 Single Sample: Test of Hypothesis

Example: Two-Tail Test ( Unknown)

(Assume the population distribution is normal)

Solution: Two-Tail Test

Do not reject H0: not sufficient evidence that

Connection to Confidence Intervals

to 172.5 + (2.0639) 15.4/ 25

10.8 Two Samples: Tests on Two

Goal: Test hypotheses or form