Testing of Hypothesis

Statistics in Decision Making

Getting Observations Data

of the real world Analysis

Keeping Records
based on observations Decision
-Making
Organizing Data
according to records

2
© 1984-1994 T/Maker Co.
 Statistics
A collection of principles and
methods concerned with extracting
useful information from a set of
data to help managers make
decisions.
The subject of statistics can be
sub-divided into two basic areas:
Descriptive statistics
Inferential statistics 3
 Descriptive Statistics
• Collect data
e.g. Survey
• Present data
e.g. Tables and graphs
• Characterize data
e.g. Sample mean =  X i
n
4
 Inferential Statistics
• Estimation
e.g. Estimate the population
mean weight using the
sample mean weight

• Hypothesis testing
e.g. Test the claim that the population mean
weight is 120 pounds
Drawing conclusions and/or making decisions
concerning a population based on sample results.
5
 Problem Under Study

Data

Survey Experiment

 Once sample data has been gathered, statistical

inference allows to assess evidence in favor or some
claim about the population from which the sample
has been drawn.

 The method of inference used to support or reject

claims based on sample data is known as testing of
hypothesis.
 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 μ = $42
– population proportion
Example: The proportion of adults in this city
with cell phones is π = 0.68
 The Null Hypothesis, H0
• States the claim or assertion to be tested
Example: The average number of TV sets in
( 0 :μ  3 )
U.S. Homes is equal to three H

• Is always about a population parameter,

not about a sample statistic
H0 : μ  3 H0 : X  3
 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
The Alternative Hypothesis, H1
• Is the opposite of the null hypothesis
– e.g., The average number of TV sets in
U.S. homes is not equal to 3 ( H1: μ ≠ 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
 Hypothesis Testing Process

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

 To compare the effectiveness of different methods of

teaching

 To know whether average self-confidence score of college

students is equal to some specified value.

 To know whether average yield of a crop in a certain district

is equal to a specified value

 To compare the effects of stress management programs on

self-esteem.
 Testing of Hypothesis: Objectives

 To know whether intelligence level measured through

intelligence quotient is up to the standard

 To find if a new drug is really effective for the particular

ailment, say, in reducing blood pressure or inducing
sleep

 To compare two processes with regard to production of

certain items

 To know if the genetic fraction of the total variation in a

strain is more than a given value
 Tests of Significance

Statistical test is a procedure governed by certain rules,

that leads to take a decision about the hypothesis for its
acceptance or rejection on the basis of the sample values

These tests have wide applications in agriculture,

medicine, industry, social sciences, psychology,
etc.
 Definitions

Statistic Function of sample values, like sample mean,

sample variance

Parameter Function of population values, like

population mean, population variance

Statistical Hypothesis A definite statement about the

population parameters

If all the parameters are completely specified, the

hypothesis is called a simple hypothesis, otherwise it is
a composite hypothesis.
 Definitions...

H0 The hypothesis under test for a sample study

H1 The hypothesis tested against the null

hypothesis
H0:  = o
H1:   o (Two-Tailed Test)
 < o (Left-Tailed Test)
 > o (Right-Tailed Test)

Level of Significance ()  The maximum size of the error

(rejecting H0 when it is true) which we are
prepared to risk. The higher the value of , less
 6 Steps in
Hypothesis Testing
1. State the null hypothesis, H0 and the
alternative hypothesis, H1
2. Choose the level of significance, , and
the sample size, n
3. Determine the appropriate test statistic
and sampling distribution
4. Determine the critical values that divide
the rejection and nonrejection regions
 6 Steps in
Hypothesis Testing (continued)

5. Collect data and compute the value of the

test statistic
6. Make the statistical decision and state the
managerial conclusion. If the test statistic
falls into the nonrejection region, do not
reject the null hypothesis H0. If the test
statistic falls into the rejection region,
reject the null hypothesis. Express the
managerial conclusion in the context of
the problem
 Tests of Significance

• Normal Test

• t - Test
• Chi - Square Test
• F - Test
 The Normal Distribution

f(X) Changing μ shifts the

distribution left or right.

Changing σ increases or
decreases the spread.
σ

μ X
 The Normal Distribution:
as mathematical function (pdf)

1 x 2
1  ( )
f ( x)  e 2 
 2
This is a bell shaped
Note constants: curve with different
=3.14159 centers and spreads
e=2.71828 depending on  and 
Normal distribution is defined by
its mean and standard dev.
2
x ~ N (μ, σ )
E(X)=

Var(X)=2

Standard Deviation(X)=
68-95-99.7 Rule

68% of
the data

95% of the data

99.7% of the data

**The beauty of the normal curve:

No matter what  and  are, the area between - and

+ is about 68%; the area between -2 and +2 is
about 95%; and the area between -3 and +3 is
about 99.7%. Almost all values fall within 3 standard
deviations.
 The Standard Normal Distribution
(Z)
All normal distributions can be converted into
the standard normal curve by subtracting the
mean and dividing by the standard deviation:
X 
Z

 Normal test
Test for the Mean of a Normal Population

Population Variance is Known

If xi ( i =1,,n) is a r.s of size n from N(, 2), then
σ2
  x ~ N (μ, )
  n

H0 :  = 0 or

H0 : the sample has been drawn from the population

with mean 0

H1 :   0 (two-tailed) or  > 0 (right-tailed) or

 < 0 (left-tailed)
x μ
Z ~ N (0, 1)
σ
n
Test Statistic:
 Test for the Mean…

Test Criteria
Depending on the alternative hypothesis selected, the test
criteria is as follows:

Reject H0 at level
H1 Test of significance 
if
  0 Two-tailed test Z> Z/2
 < 0 Left-tailed test Z < -Z
 > 0 Right-tailed test Z > Z

Z is the table value of Z at level of significance .

 Some Critical Values of Z

Level of Critical value of Z

Significance
 
Two-tailed Single tailed test
test Z/2 (Z)
10% 1.645 1.280

5% 1.960 1.645

1% 2.580 2.330
 Test for the Mean…

Population Variance is Unknown

Large Sample (n>30)

2 is estimated by sample variance i.e.,
̂ 2 = s2,
where
1 n
2
s  
n  1 i 1
(x i  x ) 2

Normal test is then applied

 Hypothesis Testing Example
Test the claim that the true mean # of TV sets in
Indian homes is equal to 3.
(Assume σ = 0.8)

1. State the appropriate null and alternative

hypotheses
 H0: μ = 3 H1: μ ≠ 3 (This is a two-tail test)
2. Specify the desired level of significance and the sample
size
 Suppose that  = 0.05 and n = 100 are chosen for this
test
 Hypothesis Testing Example
(continued)

3. Determine the appropriate technique

 σ is known so this is a Z test.
4. Determine the critical values
 For  = 0.05 the critical Z values are ±1.96
5. Collect the data and compute the test statistic
 Suppose the sample results are
n = 100, X = 2.84 (σ = 0.8 is assumed known)
So the test statistic is:

X μ 2.84  3  .16
Z     2.0
σ 0.8 .08
n 100
 Hypothesis Testing Example
(continued)
• 6. Is the test statistic in the rejection region?

 = 0.05/2  = 0.05/2

Reject H0 Do not reject H0 Reject H0

Reject H0 if
Z < -1.96 or -Z= -1.96 0 +Z= +1.96
Z > 1.96;
otherwise do
not reject H0
Here, Z = -2.0 < -1.96, so the test
statistic is in the rejection region
 Hypothesis Testing Example
(continued)
6(continued). Reach a decision and interpret the result

 = 0.05/2  = 0.05/2

Reject H0 Do not reject H0 Reject H0

-Z= -1.96 0 +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 Indian homes is not equal to 3
 Test for the Mean…ANOTHER Example

From a class, 36 students were selected at random and their marks

in a subject out of 20 were observed. The mean and standard
deviation are 18.7 and 1.25. Test whether the mean marks of
students is 19.
Solution:
H0: The sample of students has been drawn from the
population with mean marks  = 19
H1:   19
x  18.7,
n = 36,  = 19,  = 1.25

Under H0,
18.7 19.0
Z   1.440
1.25
36
H0 is accepted at 5% level of significance.
 Test for Difference of Means

Popn. I  N(1, σ12) Popn. II  N(2, σ 22),

 
n1 x1 n2 x2

Population Variances are Known

  H0 : 1 = 2

Test Statistic: Normal test

x1  x 2  (μ1  μ 2 )
Z
σ12 σ 22

n1 n 2
 Test for Difference of Means…Example

Information on two sets of samples regarding the expenditure

in Rs. per month per family

n1= 42 x1  744.85 σ12  158165.43

n2= 32 x 2  516.78 σ 22  26413.61

Test whether the average expenditure per month per family is

equal.
H0 : 1 = 2 H1: 1  2

Z = 3.36
Z > 1.96, H0 is rejected. The average expenditure per month
per family in the two populations is not equal.
 Test for Difference of Means…

Under H0

x1  x 2 x1  x 2
Z  if σ12  σ 22  σ 2
σ12 σ 22 1 1
 σ 
n1 n 2 n1 n 2

Population Variances are known & Equal

 Test for Single Proportion

n  Sample size
x  Persons possessing the given attribute
x
   p  Observed proportion of successes
n
 
P  Population proportion, Q = 1- P
H0: P = P0

H1: P  P0 or P > P0 or P < P0

Test Statistic: Normal test
p-P
Z ~ N (0,1)
PQ/n
 Test for Single Proportion…

Test Criteria:

  Reject H0 at level of
H1 Test
  significance  if
P  P0 Two-tailed test Z> Z/2
P < P0 Left-tailed test Z < -Z
P > P0 Right-tailed Z > Z
test
 Test for Single Proportion…Example

In order to test the conjecture of the management that 60%

employees favour a new bonus scheme, a sample of 150
employees was taken. 55 employees favoured the new bonus
scheme.
Solution: n = 150, x = No. of employees favoured = 55
x
p= = 0.367
n
H0: P = 0.60
H1: P  0.60
p-P 0.367 - 0.60
  Z   - 5.825
PQ/n 0.60 x 0.40/150
Z>2.58, Ho is rejected and it is concluded that 60% employees
do not favour the new bonus scheme.
 Test for Difference of Proportions

Let x1 (x2) be the number of persons possessing a given

attribute A in random sample of size n1 (n2) from 1st (2nd)
population. Then sample proportions will be
x1 x2
p1  , p 2 
n1 n2

Let P1 and P2 be the population proportions

H0: P1 = P2
H1: P1  P2 or P1 > P2 or P1 < P2

Test Statistic: Normal test

p1  p 2  ( P1  P2 )
Z ~ N (0,1)
P1Q1 P2 Q 2

n1 n2
 Test for difference of proportions…

Test Statistic: Under H0: P1 = P2 = P (say)

Q =1-P

p1  p 2
Z
1 1
PQ(  )
n1 n 2

 n1p1  n 2 p 2
P
n1  n 2
 Test for difference of proportions…Example
In a district, 450 persons were regular consumers of tea out of a
sample of 1000 persons. In another district, 400 were regular
consumers of tea out of a sample of 800 persons. Is there a
significant difference between the two districts as far as tea
drinking habit is concerned?
Solution: H0: P1 = P2 = P
H1: P1  P2
0.45  0.5
Z  2.08
1 1
0.47x0.53(  )
1000 800

Significant at 5% as calculated value is more than table value

(1.96). Reject H0
 t - tests

Test for the Mean of a Normal Population

Small Sample (n < 30) and Population Variance is Unknown

A r.s x1,…,xn  N(, 2)

H0 :  = 0
H1 :   0 or  > 0 or  < 0

Test Statistic: t - test

x  μ0
t ~ t n 1
s/ n
1 n 1 n
x   xi 2
s   (x i  x) 2
n i 1 n  1 i 1

The null hypothesis is accepted or rejected accordingly.

 Test for the Mean…

Test Criteria:

Reject H0 at level
H1 Test
of significance  if
  0 Two-tailed test t> tn-1(/2)
 < 0 Left-tailed test t < -tn-1()
 > 0 Right-tailed t > tn-1()
test
 Test for the Mean…Example
Suppose the claim has been made that the height of adult males in a
college is different from what it used to be and we wish to test this
hypothesis. A campus wide survey made 20 years ago found that the
mean height of males was 69.5 in. To study this, a random sample of
15 males of the same age from current students was taken and their
height recorded.
Solution:
H0: The average height is 69.5 in.
H1: The average height is more than 69.5 in. 65.0, 67.5, 68.0,
x  70.4 s  0.71 68.5, 69.0, 69.5,
69.5, 70.0, 71.0,
70.4  69.5 71.5, 71.5, 72.5,
t  1.27 ~ t14
0.71/ 15 72.5, 74.5, 75.5

Since |t| < 2.14 (value of t at 5% and 14 d.f), the mean height is 69.5
in.
 t-table
p
0.50 0.10 0.05 0.02 0.01
n
1 1.000 6.34 12.71 31. 82 63.66
2 0.816 2.92 4.30 6.96 9.92
3 0.765 2.35 3.18 4.54 5.84
4 0.741 2.13 2.78 3.75 4.60
5 0.727 2.02 2.57 3.36 4.03
6 0.718 1.94 2.45 3.14 3.71
7 0.711 1.90 2.36 3.00 3.50
8 0.706 1.86 2.31 2.90 3.36
9 0.703 1.83 2.26 2.82 3.25
10 0.700 1.81 2.23 2.76 3.17
11 0.697 1.80 2.20 2.72 3.11
12 0.695 1.78 2.18 2.68' 3.06
13 0.694 1.77 2.16 2.65 3.01
14 0.692 1.76 2.14 2.62 2.98
15 0.691 1.75 2.13 2.60 2.95
16 0.690 1.75 2.12 2.58 2.92
17 0.689 1.74 2.11 2.57 2.90
18 0.688 1.73 2.10 2.55 2.88
19 0.688 1.73 2.09 2.54 2.86
20 0.687 1.72 2.09 2.53 2.84
 Test for the Difference of Two Population Means

Population Variances are Unknown but Equal

Let x1 (x 2 ) be the sample mean of a sample of size n1 (n2) from

a population with mean 1 (2).
H0 : 1 - 2 = 0

Test Statistic: Under H0

x1  x 2  δ 0
t ~ t n1  n 2  2
1 1
σ 
n1 n 2

2 is estimated from the sample

2 2
(n  1)s  (n  1)s
s2  1 1 2 2
n1  n 2  2
 Test for the Difference…Example

In order to compare the reading ability of dyslexic children by

placing a blue plastic overlay on reading material with a clear
overlay, an experiment was conducted with 12 children in each
group and the scores are as follows:

Blue Overlay – 70, 80, 90, 80, 50, 80, 70, 80, 70, 80, 80, 70

Clear Overlay – 50, 40, 50, 50, 60, 60, 60, 40, 60, 70, 60, 80

Assess whether reading ability of dyslexic children improved by

placing a blue plastic overlay?
 Test for the Difference…Example

Solution:
H0 : 1 = 2 H1 : 1 > 2

x1  75, x 2  56.7,
s12  100, s 22  133.3

t  4.15 ~ t 22

Since t > 2.074 (value of t at 5% and 22 d.f), The null hypothesis

is significant and thus not accepted. This concludes that blue
plastic overlays on reading material improves visual processing
and provides immediate improvement in the reading ability of
dyslexic children.
 Paired t-test for Difference of Means

 When n1 = n2 = n

 Two samples are not independent (paired)

 Let (xi, yi), i=1,..,n be a r.s from a B.N. population

 Let di = xi - yi
H0 : 1 - 2 = 0

Test Statistic: Under H0

d  μ0
t ~ t n -1
s/ n
1 n 1 n
d   di 2
s   (d i  d) 2
n i 1 n  1 i 1
 Paired t-test…Example

In a study to know the effect of training to 8 researchers on a

particular subject, following are the pre and post training
scores:

Before training: 49 53 51 52 47 50 52 53

After training: 52 55 52 53 50 54 54 53

Can we conclude that training has improved the performance

of the researchers?
 Paired t-test…Example

Solution:
H0 : B = A H 1 : B <  A

2
Researcher No. Before After di = xi - ydi i
(xi) (yi)

1. 49 52 -3 9
2. 53 55 -2 4
3. 51 52 -1 1
4. 52 53 -1 1
5. 47 50 -3 9
6. 50 54 -4 16
7. 52 54 -2 4
8. 53 53 0 0
 Paired t-test…Example

1 n - 16
d   di   -2
n i 1 8

1 n
s   (d i  d) 2  1.714
2
7 i 1

|d| 2
| t |   4.32 ~ t 7
s/ n 1.714/ 8

t (5%,7 d.f.) = 1.90

H0 is rejected, so it is concluded that training has improved
the performance of the researchers.
 Chi-Square tests

Test for the variance of a normal population

Let x1, x2,…,xn (n2) be a r.s from N(, 2).

H0 : σ 2  σ 02

Test Statistic: Under H0

2
n  xi  μ 
   
2
 ~  2n
when  is known
i 1  σ 0 

2
n  xi  x 
   
2
 ~  2n -1
i 1  σ 0  when  is unknown
 Chi-Square tests… Example

The precision of an instrument, measured in terms of

variance, is not less than 0.16. Given the 11 measurements
(2.3, 2.5, 2.3, 2.4, 2.7, 2.5, 2.6, 2.5, 2.7, 2.6, 2.5) on the
instrument, test the claim:
Solution: H0: σ 2  0.16
H1: σ 2  0.16

x  2.51 2
n  xi  x 
   
2
  1.182
i 1  σ 0 

Tabulated value of 2 with 10 d.f. at 1% level is 2.5. Since

calculated value < tabulated, H0 is not significant and hence the
precision of the instrument is 0.16.
 Test of Goodness of Fit

To test the discrepancy between the observed and the expected

frequency
H0 : the fitted distribution is a good fit
H1 : not a good fit

Test Statistic:
Oi  Observed frequency of ith class
Ei  Expected frequency of ith class, i =1,…,n.
n
2  
 Oi  E i  2 ~  2n -r -1
i 1 Ei
 Test of Goodness of Fit…Example

• Suppose four brands of cola are equally preferred by consumers.

• It is of interest to know whether in the population of consumers,

the proportion of individuals preferring each brand is ¼.

• To test this null hypothesis, 100 individuals were randomly

selected.

• They were asked to taste the four brands without disclosing the
brand name and then declare their preference.

H0 : PA =PB = PC = PD = 0.25
 Test of Goodness of Fit…Example

Frequency
Observed (Oi) Expected (Ei) Oi - Ei
20 25 -5
31 25 6
28 25 3
21 25 -4

2
(O  E ) 2
2   i i
 3.44
i 1 Ei

Since 3.44 < 7.82 (value of chi-square at 5% and 3 d.f), the result is
not significant and hence the proportion is same which is 1/4.
 Table of Chi-square
p
0.99 0.95 0.50 0.30 0.20 0.10 0.05 0.01
n
1 0.0002 0.004 0.46 1.07 1.64 2.71 3.84 6.64
2 0.020 0.103 1.39 2.41 3.22 4.00 5.99 9.21
3 0.115 0.35 2.17 3.66 4.64 6.25 7.82 11.34
4 0.30 0.71 3.86 4.88 5.99 7.78 9.49 13.28
5 0.55 1.14 4.35 6.06 7.29 9.24 11.07 15.09
6 0.87 1.64 5.35 7.23 8.56 10.64 12.59 16.81
7 1.24 2.17 6.35 8.38 9.80 12.02 14.07 18.48
8 1.65 2.73 7.34 9.52 11.03 13.36 15.51 20.09
9 2.09 3.32 8.34 10.66 12.24 14.68 16.92 21.67
10 2.56 3.94 9.34 11. 78 13.44 15.99 18.31 23.21
11 3.05 4.58 10.34 12.90 14.63 17.28 19.68 24.72
12 3.37 5.23 11.34 14.01 15.81 18.55 21.03 26.22
13 4.11 5.89 12.34 15.12 16.98 19.81 22.36 27.69
14 4;66 6.57 13.34 16.22 18.15 21.06 23.68 29.14
15 5.23 7.26 14.34 17.32 19.31 22.31 25.00 30.58
16 5.81 7.96 15.34 18.42 20.46 23.54 26.30 32.06
17 6.41 8.67 16.34 19.51. 21.62 24.77 27.59 33.41
18 7.02 9.39 17.34 20.60 22.76 25.99 28.87 34.80
19 7.63 10.12 18.34 21.69 23.90 27.20 30.14 36.19
20 8.26 10.85 19.34 22.78 25.04 28.41 31.41 37.57
 Test of Independence

Contingency Table

Class A1 A2 A3

B1 n11 n21 n31

B2 n12 n22 n32

B3 n13 n23 n33

 Test of Independence…

H0: The attributes are independent

H1: They are not independent

Test Statistic:
Oij  Observed frequency
Eij  Expected frequency i =1,…,r; j =1,…,s
c r (Oij - E ij ) 2
2    ~  (r2 -1) (c-1)
j1 i 1 E ij

H0 is rejected at level  if  2  (r2 -1) (c -1)

 Test of Independence…Example 1

From the following table, test the hypothesis that the test
result is related to the sex of the student:

Sex Pass Fail Total

Male 99 36 135
Female 20 5 25
Total 119 41 160
 Test of Independence…Example 1

H0: Test result is independent of the sex of the student

Sex Pass Fail Total

Male 99 36 135
(100.4) (34.6)
Female 20 5 25
(18.6) (6.4)
Total 119 41 160

χ 2  0.492 ~ χ 12

χ 12 (5%)  3.84
 Test of Independence…Example 2

The educational standard of adoptability of new innovations

among 500 farmers are given below. Test whether the educational
standard has any impact on their adoptability of innovation.

H0: Adoptability is independent of the educational standard

Educational Standard
Illiterat Matric Graduat Post
e e Graduate
Adopted 60 70 35 25
(110.2) (38.0) (20.9) (20.9)
Not 230 30 20 30
Adopted (179.8) (62.0) (34.1) (34.1)
χ 2  96.99 ~ χ 32 χ 32 (5%)  7.82 χ 32 (1%)  11.34
 F- tests

Test for the comparison of two population variances

Popn. I  N(1, σ12 ) Popn. II  N(2, σ 22 ),

 
n1 x1 s12 n2 x 2 s 2
2

1 n1 1 n2
  s12   i 1 ,
(x  x ) 2
s 22   j 2
(x  x ) 2
n1  1 i1 n 2  1 j1

1 n1 1 n2
x1   x i , x2  xj
n1 i 1 n 2 j1
 F- test…

2 2
H0 : σ1  σ 2

Test Statistic:

s12
F  2 ~ Fn1 1, n 2 1
s2

The computed value of F is compared with the tabulated

value and the inference is drawn accordingly.
 Example
The nicotine contents in mgm in two samples of tobacco
were found to be as follows:
Sample A: 24 27 26 21 25
Sample B: 27 30 28 31 22 36
Test whether the two samples have been taken from the
population with the same variability.

Solution: n1 = 6, n2 = 5

H0 : σ1  σ 2 ,
2 2
H1 : 12   22

s12
F  2  4.08 ~ F5, 4
s2

Since F < 5.19 (value of F at 5% and 5, 4 d.f), the two

 F-table (5%)
n2
n1 1 2 3 4 5 6 8 12 24 

2 18.51 19.00 19.16 19.25 19.30 19.33 19.37 19.41 19.45 19.50
3 10.13 9.55 9.28 9.12 9.01 8.94 8.84 8.74 8.64 8.53
4 7.71 6.94 6.59 6.39 6.26 6.16 6.04 5.91 5.77 5.63
5 6.61 5.79 5.41 5.19 5.05 4.95 4.82 4.68 4.53 4.36
6 5.99 5.14 4.76 4.53 4.39 4.28 4.15 4.00 3.84 3.67
7 5.59 4.74 4.35 4.12 3.97 3.87 3.73 3.57 3.41 3.23
8 5.32.. 4.46 4.07 3.84 3.69 3.58 3.44 3.28 8.12 2.93
9 5.12 4.26 3.86 3.63 3.48 3.37 3.23 3.07 2.90 2.71
10 4.96 4.10 3.71 3.48 3.33 3.22 3.07 2.91 2.74 2.54
12 4.75 3.88 3.49 3.26 3.11 3.00 2.85 2.69 2.50 2.30
14 4.60 3.74 3.34 3.11 2.96 2.85 2.70 2.53 2.35 2.13
16 4.49 3.63 3.24 3.01 2.85 2.74 2.59 2.42 2.24 2.01
18 4.41 3.55 3.16 2.93 2.77 2.66 2.51 2.34 2.15 1.92
20 4.35 3.49 3.10 2.87 2.71 2.60 2.45 2.28. 2.08 1.84
25 4.24 3.38 2.99 2.76 2.60 2.49 2.34 2.16 1.96 1.71
30 4.17 3.32 2.92 2.69 2.53 2.42 2.27 2.09 1.89 1.62
40 4..08 3.23 2.84 2.61 2.45 2.34 2.18 2.00 1.79 1.51
60 4..00 3.15 2.76 2.52 2.37 2.25 2.10 1.92. 1.70 1.39
80 3.96 3.11 2.72 2.49 2.33 2.21 2.06 1.88 1.65 1.32
 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
Check:
with 25 responses. Test
at the  = 0.05 n π = (500)(.08) = 40

significance level. n(1-π) = (500)(.92) = 460
 Z Test for Proportion: Solution
Test Statistic:
H0: π = 0.08
H1: π  0.08 p  .05  .08
Z   2.47
 (1  ) .08(1  .08)
 = 0.05
n 500
n = 500, p = 0.05
Critical Values: ± 1.96 Decision:
Reject Reject Reject H0 at  = 0.05
Conclusion:
.025 .025
There is sufficient
-1.96 0 1.96 z evidence to reject the
-2.47 company’s claim of 8%
response rate.
 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
H0: μ= 168
S = $15.40. Test at the
H1: μ 168
 = 0.05 level.
(Assume the population distribution is normal)
 Example Solution:
Two-Tail Test
H0: μ= 168 /2=.025 /2=.025
H1: μ 168

 = 0.05 Reject H0 Do not reject H0 Reject H0

t n-1,α/2
-t n-1,α/2 0
• n = 25 -2.0639 2.0639
1.46
  is unknown, so X μ 172.50  168
t n1    1.46
use a t statistic S 15.40
n 25
• Critical Value:

t24 = ± 2.0639 Do not reject H0: not sufficient evidence that true
mean cost is different than $168