CHAPTER 07

HYPOTHESIS TESTS ABOUT THE

MEAN AND PROPORTION
OPENING EXAMPLE
 HYPOTHESIS TESTS: AN
INTRODUCTION
• Two Hypotheses
• Rejection and Nonrejection Regions
• Two Types of Errors
• Tails of a Test
 TWO HYPOTHESES

Definition
A null hypothesis is a claim (or statement) about a
population parameter that is assumed to be true until it is
declared false.
 TWO HYPOTHESES

Definition
An alternative hypothesis is a claim about a population
parameter that will be true if the null hypothesis is false.
 REJECTION AND NONREJECTION
REGIONS
Figure 4.1 Nonrejection and rejection regions for the court
case.
 TWO TYPES OF ERRORS

Table 4.1 Four Possible Outcomes for a Court Case

 TWO TYPES OF ERRORS

Definition
A Type I error occurs when a true null hypothesis is
rejected. The value of α represents the probability of
committing this type of error; that is,
α = P(H0 is rejected | H0 is true)
The value of α represents the significance level of the
test.
 TWO TYPES OF ERRORS

Definition
A Type II error occurs when a false null hypotheses is not
rejected. The value of β represents the probability of
committing a Type II error; that is,
β = P (H0 is not rejected | H0 is false)
The value of 1 – β is called the power of the test. It
represents the probability of not making a Type II error.
FOUR POSSIBLE OUTCOMES FOR A TEST OF
HYPOTHESIS
 TAILS OF A TEST
Definition

A two-tailed test has rejection regions in both tails,

a left-tailed test has the rejection region in the left tail,

and a right-tailed test has the rejection region in the
right tail of the distribution curve.
 A TWO-TAILED TEST
• According to the U.S. Bureau of Labor Statistics, people in
the United States who had a bachelor’s degree and were
employed earned an average of $1038 a week in 2010.
Suppose an economist wants to check whether this mean
has changed since 2010. The key word here is
changed.
• The mean weekly earning of employed Americans with a
bachelor’s degree has changed if it has either increased
or decreased since 2010. This is an example of a two-
tailed test.
 A TWO-TAILED TEST
• Let be the mean weekly earning of employed Americans
with a bachelor’s degree. The two possible decisions are
as follows:
• H0 : μ = $1038 (The mean weekly earning of employed
Americans with a bachelor’s degree has not changed))
• H1 : μ ≠ $1038 pounds (The mean weekly earning of
employed Americans with a bachelor’s degree has
changed))
 A LEFT-TAILED TEST

Consider the example of the mean amount of soda in all soft-

drink cans produced by a company. The company claims that
these cans, on average, contain 12 ounces of soda.
However, if these cans contain less than the claimed
amount of soda, then the company can be accused of
cheating. Suppose a consumer agency wants to test whether
the mean amount of soda per can is less than 12 ounces.
Note that the key phrase this time is less than, which
indicates a left-tailed test.
 A LEFT-TAILED TEST
• Let μ be the mean amount of soda in all cans. The two
possible decisions are
• H0 : μ = 12 ounces (The mean is equal to 12 ounces)
• H1 : μ < 12 ounces (The mean is less than 12 ounces)
 A LEFT-TAILED TEST

In this case, we can also write the null hypothesis as

H0 : μ ≥ 12.
This will not affect the result of the test as long as the sign
in H1 is less than (<).
When the alternative hypothesis has a less than (<) sign,
the test is always left–tailed.
A LEFT-TAILED TEST.
 A RIGHT-TAILED TEST

The average price of homes in West Orange, New Jersey,

was $461,216 in 2007. Suppose a real estate researcher
wants to check whether the current mean price of homes in
this town is higher than $461,216.
The key phrase in this case is higher than, which
indicates a right-tailed test.
 A RIGHT-TAILED TEST
• Let μ be the current mean price of homes in this town. The
two possible decisions are
• H0 : μ = $461,216 (The current mean price of homes in
this town is not higher than $461,216)
• H1 : μ > $461,216 (The current mean price of homes in
this town is higher than $461,216)
 A RIGHT-TAILED TEST
When the alternative hypothesis has a greater than (>) sign,
the test is always right–tailed.
SIGNS IN H0 AND H1 AND TAILS
OF A TEST
 TWO PROCEDURES

Two procedures to make tests of hypothesis

1. The p-value approach

2. The critical-value approach
 HYPOTHESIS TESTS ABOUT
MEAN: KNOWN

If the following three conditions are fulfilled:

1. The population standard deviation σ is known

2. The sample size is small (i.e., n < 30) or large
sample (i.e., n 30)
3. The population from which the sample is selected
is normally distributed. then we use the normal
distribution to perform a test of hypothesis about
mean.
 P-VALUE APPROACH
Definition
Assuming that the null hypothesis is true, the p-value can
be defined as the probability that a sample statistic (such as
the sample mean) is at least as far away from the
hypothesized value in the direction of the alternative
hypothesis as the one obtained from the sample data under
consideration.
Note that the p–value is the smallest significance level at
which the null hypothesis is rejected.
P-VALUE APPROACH
THE P–VALUE FOR A RIGHT-
TAILED TEST.
THE P–VALUE FOR A TWO-
TAILED TEST.
 CALCULATING THE Z VALUE FOR X
 When using the normal distribution, the value of z for x for a
test of hypothesis about μ is computed as follows:

x  
z where  x 
x n
 The value of z calculated for x using this formula is also called
the observed value of z.
 STEPS TO PERFORM A TEST OF
HYPOTHESIS USING THE P–VALUE
APPROACH

1. State the null and alternative hypothesis.

2. Select the distribution to use.
3. Calculate the p–value.
4. Make a decision.
 EXAMPLE 1
At Canon Food Corporation, it used to take an average of 90 minutes
for new workers to learn a food processing job. Recently the
company installed a new food processing machine. The supervisor
at the company wants to find if the mean time taken by new workers
to learn the food processing procedure on this new machine is
different from 90 minutes. A sample of 20 workers showed that it
took, on average, 85 minutes for them to learn the food processing
procedure on the new machine. It is known that the learning times
for all new workers are normally distributed with a population
standard deviation of 7 minutes. Find the p–value for the test that
the mean learning time for the food processing procedure on the
new machine is different from 90 minutes. What will your conclusion
be if α = .01?
 SOLUTION
 Step 1: H : μ = 90
0

H1: μ ≠ 90
 Step 2: The population standard deviation σ is known,
the sample size is small (n < 30), but the population
distribution is normal. We will use the normal distribution
to find the p–value and make the test.
 SOLUTION

 Step 3:

 7
x   1.56524758 min utes
n 20
x  85  90
z   3.19
x 1.56524758

p-value = 2(.0007) = .0014

THE P-VALUE FOR A TWO-
TAILED TEST.
 SOLUTION
 Step 4: Because p-value = 0.0014 which is less than the
significance level of 0.01, we reject the null hypothesis at
this significance level.
Therefore, we conclude that the mean time for learning the
food processing procedure on the new machine is different
from 90 minutes.
 EXAMPLE 2

The management of Priority Health Club claims that its

members lose an average of 10 pounds or more within
the first month after joining the club. A consumer agency
that wanted to check this claim took a random sample of
36 members of this health club and found that they lost
an average of 9.2 pounds within the first month of
membership with a population standard deviation of 2.4
pounds.
a) Find the p–value for this test.
b) What will your decision be if α = .01? What if α = .05?
 SOLUTION
 Step 1: H : μ ≥ 10
0

H1: μ < 10
 Step 2: The population standard deviation σ is known, the
sample size is large (n > 30). Due to the Central Limit
Theorem, we will use the normal distribution to find the p–
value and perform the test.
 SOLUTION
 Step 3:

 2.4
x   .40
n 36
x   9.2  10
z   2.00
x .40
p-value = .0228
THE P-VALUE FOR A LEFT-TAILED
TEST.
 SOLUTION
 Step 4:
 Since α = .01 is less than the p-value of .0228, we do
not reject the null hypothesis at this significance level.
Consequently, we conclude that the mean weight lost
within the first month of membership by the members of
this club is 10 pounds or more.

 Because α = .05 is greater than the p-value of .0228, we

reject the null hypothesis at this significance level.
Therefore, we conclude that the mean weight lost within
the first month of membership by the members of this
club is less than 10 pounds.
CLASS WORK 1
 CLASS WORK 2
• The manufacturer of a certain brand of auto batteries claims
that the mean life of these batteries is 45 months. A
consumer protection agency that wants to check this claim
took a random sample of 24 such batteries and found that
the mean life for this sample is 43.05 months. The lives of
all such batteries have a normal distribution with the
population standard deviation of 4.5 months.
 CLASS WORK 2
a) Find the p-value for the test of hypothesis with the
alternative hypothesis that the mean life of these batteries
is less than 45 months. Will you reject the null hypothesis
at
b) Test the hypothesis of part a using the critical-value
approach and
 CRITICAL VALUE APPROACH
Test Statistic
In tests of hypotheses about μ using the normal
distribution, the random variable
x  
z where x 
x n

is called the test statistic. The test statistic can be

defined as a rule or criterion that is used to make the
decision whether or not to reject the null hypothesis.
 HYPOTHESIS TESTS ABOUT
MEAN: KNOWN
Steps to Perform a Test of Hypothesis with the Critical-
Value Approach

1. State the null and alternative hypotheses.

2. Select the distribution to use.
3. Determine the rejection and nonrejection regions.
4. Calculate the value of the test statistic.
5. Make a decision.
 EXAMPLE
The TIV Telephone Company provides long-distance telephone
service in an area. According to the company’s records, the
average length of all long-distance calls placed through this
company in 2009 was 12.44 minutes. The company’s
management wanted to check if the mean length of the
current long-distance calls is different from 12.44 minutes. A
sample of 150 such calls placed through this company
produced a mean length of 13.71 minutes with a standard
deviation of 2.65 minutes. Using the 2% significance level,
can you conclude that the mean length of all current long-
distance calls is different from 12.44 minutes?
 SOLUTION
• Step 1: H0 : μ = 12.44
H1 : μ ≠ 12.44
• Step 2: The population standard deviation σ is known, and
the sample size is large (n > 30). Due to the Central Limit
Theorem, we will use the normal distribution to perform the
test.
 SOLUTION
• Step 3: α = .02
• The ≠ sign in the alternative hypothesis indicates that the
test is two-tailed
• Area in each tail = α / 2= .02 / 2 = .01
• The z values for the two critical points are -2.33 and
2.33
FIGURE
 CALCULATING THE VALUE OF
THE TEST STATISTIC

 When using the normal distribution, the value of the test

statistic z for x for a test of hypothesis about μ is
computed as follows:
x  
z where  x 
x n

 The value of z for x is also called the observed value of z.

 SOLUTION
• Step 4:
 2.65
x   .21637159
n 150
x   13.71  12.44
z  5.87
x .21637159
 SOLUTION
 Step 5: This value of z = 5.87 is greater than the critical
value of z = 2.33, and it falls in the rejection region in
the right tail in Figure .
 Hence, we reject H and conclude that based on the
0
sample information, it appears that the mean length of all
such calls is not equal to 12.44 minutes.
 EXAMPLE
The mayor of a large city claims that the average net
worth of families living in this city is at least $300,000. A
random sample of 25 families selected from this city
produced a mean net worth of $288,000. Assume that
the net worths of all families in this city have a normal
distribution with the population standard deviation of
$80,000. Using the 2.5% significance level, can you
conclude that the mayor’s claim is false?
 SOLUTION
• Step 1: H0 : μ ≥ $300,000
H1 : μ < $300,000
• Step 2: The population standard deviation σ is known, the
sample size is small (n < 30), but the population
distribution is normal.
• Consequently, we will use the normal distribution to
perform the test.
 SOLUTION

• Step 3: α = .025
• The < sign in the alternative hypothesis indicates that
the test is left-tailed
• Area in the left tail = α = .025
• The critical value of z is -1.96
FIGURE
 SOLUTION
• Step 4:

 80,000
x   $16,000
n 25
x   288,000  300,000
z   .75
x 16,000
 SOLUTION
 Step 5: This value of z = -.75 is greater than the critical
value of z = -1.96, and it falls in the rejection region. As a
result, we fail to reject H0.
 Therefore, we can state that based on the sample
information, it appears that the mean net worth of families in
this city is not less than $300,000.
CLASS WORK 1
 CLASS WORK 2
• Consider the following hypothesis test:
H 0 :  25
H1 :   25
• A sample of 40 provided a sample mean of 26.4. The
population standard deviation is 6.
• a. At α .01, what is your conclusion?
 HYPOTHESIS TESTS ABOUT :
NOT KNOWN
1. The p-Value Approach

If the following three conditions are fulfilled:

1. The population standard deviation σ is not known
2. The sample size is small (i.e., n < 30) or large (i.e., n ≥
30)
3. The population from which the sample is selected is
normally distributed. then we use the t- distribution to
perform a test of hypothesis about mean.
 HYPOTHESIS TESTS ABOUT : NOT
KNOWN
Test Statistic
The value of the test statistic t for the sample mean
x is computed as
x  s
t where s x 
sx n

The value of t calculated for x by using this formula is

also called the observed value of t.
 EXAMPLE 1
A psychologist claims that the mean age at which children
start walking is 12.5 months. Carol wanted to check if
this claim is true. She took a random sample of 18
children and found that the mean age at which these
children started walking was 12.9 months with a
deviation of .80 month. It is known that the ages at which
all children start walking are approximately normal
distributed. Find the p-value for the test that the mean
age at which all children start walking is different from
12.5 months. What will your conclusion be if the
significance level is 1%?
 SOLUTION
• Step 1: H0 : μ = 12.5
H1 : μ ≠ 12.5
• Step 2: The population standard deviation σ is not
known, the sample size is small (n < 30), and the
population is normally distributed. Consequently,
we will use the t distribution to find the p-value for
the test.
 SOLUTION

• Step 3: The ≠ sign in the alternative hypothesis indicates

that the test is two-tailed
s .80
sx   .18856181
n 18
x   12.9  12.5
t  2.121
sx .18856181
and df = n – 1 = 18 – 1 = 17
.02 < p-value < .05
FIGURE
 SOLUTION
 Step 4: For any α greater than .05, we will reject the null
hypothesis. For any α less than .02, we will not reject the
null hypothesis. For our example, α = .01, which is less than
the lower limit of the p-value ranges of .02. As a result, we
fail to reject H0 and conclude that the mean age at which
all children start walking is not different from 12.5 months.
 EXAMPLE 2
Grand Auto Corporation produces auto batteries. The
company claims that its top-of-the-line Never Die batteries
are good, on average, for at least 65 months. A consumer
protection agency tested 45 such batteries to check this
claim. It found the mean life of these 45 batteries to be
63.4 months with a standard deviation of 3 months. Find
the p-value for the test that mean life of all such
batteries is less than 65 months. What will your conclusion
be if the significance level is 2.5%?
 SOLUTION
Step 1: H0 : μ ≥ 65
H1 : μ < 65
Step 2: The population standard deviation σ is not known
and the sample size is large (n > 30). Consequently, we
will use the t distribution to find the p-value for the test.
 SOLUTION
Step 3: The < sign in the alternative hypothesis indicates
that the test is left-tailed

s 3
sx   .44721360
n 45
x  63.4  65
t   3.578
sx .44721360
and df = n – 1 = 45 – 1 = 44
p-value < .001
FIGURE
 CLASS WORK 1
• A random sample of 8 observations taken from a
population that is normally distributed produced a sample
mean of 44.98 and a standard deviation of 6.77.
• Find the critical and observed values of t and the ranges
for the p-value for each of the following tests of
hypotheses, using .05.
 CLASS WORK 2
• A random sample of 14 observations taken from a
population that is normally distributed produced a sample
mean of 212.37 and a standard deviation of 16.35.
Find the critical and observed values of t and the ranges
for the p-value for each of the following tests of
hypotheses, using .10.
Critical value approach
 EXAMPLE 3

Refer to Example 1. A psychologist claims that the mean age

at which children start walking is 12.5 months. Carol
wanted to check if this claim is true. She took a random
sample of 18 children and found that the mean age at which
these children started walking was 12.9 months with a
standard deviation of .80 month. Using the 1% significance
level, can you conclude that the mean age at which all
children start walking is different from 12.5 months? Assume
that the ages at which all children start walking have an
approximately normal distribution.
 SOLUTION
• Step 1: H0 : μ = 12.5
H1 : μ ≠ 12.5
• Step 2: The population standard deviation σ is not known,
the sample size is small (n < 30), and the population is
normally distributed. Consequently, we will use the t
distribution to perform the test.
 SOLUTION
Step 3: Significance level = .01. The ≠ sign in the alternative
hypothesis indicates that the test is two-tailed and the
rejection region lies in both tails.
• Area in each tail = α/2 = .01/2 = .005
• df = n – 1 = 18 – 1 = 17
• The critical values for t for 17 df and .005 area in each tail
are -2.898 and 2.898.
FIGURE
 SOLUTION
Step 4: s .80
sx   .18856181
n 18
x   12.9  12.5
t  2.121
sx .18856181

The value of the test statistic t = 2.121 falls between the two
critical points, -2.898 and 2.898, which is the nonrejection
region. Consequently, we fail to reject H0.
As a result, we can state the difference between the
hypothesized population mean and the sample mean is so
small that it may have occurred because of sampling error.
 EXAMPLE 4
The management at Dara salam Bank is always concerned
about the quality of service provided to its customers. With
the old computer system, a teller at this bank could serve, on
average, 22 customers per hour. The management noticed
that with this service rate, the waiting time for customers was
too long. Recently the management of the bank installed a
new computer system in the bank, expecting that it would
increase the service rate and consequently make the
customers happier by reducing the waiting time.
 EXAMPLE 4
To check if the new computer system is more efficient
than the old system, the management of the bank took a
random sample of 70 hours and found that during these
hours the mean number of customers served by tellers
was 27 per hour with a standard deviation of 2.5. Testing
at the 1% significance level, would you conclude that the
new computer system is more efficient than the old
computer system?
 SOLUTION
• Step 1: H0 : μ = 22
H1 : μ > 22
• Step 2: The population standard deviation σ is not known
and the sample size is large (n > 30). Consequently, we
will use the t distribution to perform the test.
 SOLUTION
Step 3: Significance level = .01. The > sign in the
alternative hypothesis indicates that the test is right-tailed
and the rejection region lies in the right tail.
• Area in the right tail = α = .01
• df = n – 1 = 70 – 1 = 69
• The critical value for t for 69 df and .01 area in the right tail
is 2.382.
FIGURE
 SOLUTION
Step 4: s 2.5
sx   .29880715
n 70
x  27  22
t  16.733
sx .29880715

The value of the test statistic t = 16.733 is greater than the

critical value of t = 2.382, and it falls in the rejection
region. Consequently, we reject H0. As a result, we
conclude that the value of the sample mean is too large
compared to the hypothesized value of the population
mean, and the difference between the two may not be
attributed to chance alone.
 TESTS OF HYPOTHESIS FOR USING
THE T DISTRIBUTION
What If the Sample Size Is Too Large?

1. Use the t value from the last row (the row of ∞) in Table
V of Appendix C.
2. Use the normal distribution as an approximation to the t
distribution.
 CLASS WORK 1
• Perform the following tests of hypothesis for data coming
form a normal distribution
 CLASS WORK 2
Paint manufacturing company claims that the mean drying
time for its paints is not longer than 45 minutes. A random
sample of 20 gallons of paints selected from the
production line of this company showed that the mean drying
time for this sample is 49.50 minutes with a standard
deviation of 3 minutes. Assume that the drying times for
these paints have a normal distribution
a) Using a 1% significance level, would you conclude that the
company’s claim is true?
 HYPOTHESIS TESTS ABOUT A POPULATION
PROPORTION: LARGE SAMPLES
Test Statistic
The value of the test statistic z for the sample proportion,
p̂
, is computes as
pˆ  p pq
z where  pˆ 
 pˆ n p̂

The value of p that is used in this formula is the one from the
null hypothesis. The value of q is equal to 1-p. The value of
z calculated for using the above formula is also called the
observed value of z.
 EXAMPLE 1
According to a Nationwide Mutual Insurance Company
Driving While Distracted Survey conducted in 2008, 81% of
the drivers interviewed said that they have talked on their
cell phones while driving (The New York Times, July 19,
2009). The survey included drivers aged 16 to 61 years
selected from 48 states. Assume that this result holds true
for the 2008 population of all such drivers in the United
States. In a recent random sample of 1600 drivers aged 16
to 61 years selected from the United States, 83% said that
they have talked on their cell phones while driving.
 EXAMPLE
Find the p-value to test the hypothesis that the current
percentage of such drivers who have talked on their
cell phones while driving is different from 81%. What
is your conclusion if the significance level is 5%?
 SOLUTION
• Step 1: H0 : p = .81
H1 : p ≠ .81
• Step 2: To check whether the sample is large, we
calculate the values of np and nq:
np = 1600(.81) = 1296 > 5
nq = 1600(.19) = 304 > 5
Consequently, we will use the normal distribution
to find the p-value for this test.
 SOLUTION
• Step 3: The ≠ sign in the alternative hypothesis indicates
that the test is two-tailed.

pq (.81)(.19)
 pˆ   .00980752
n 1600
pˆ  p .83  .81
z  2.04
 pˆ .00980752

p-value = 2(.0207) = .0414

FIGURE :THE REQUIRED P-VALUE
 SOLUTION

• Step 4: We can state that for any α greater than .0414

we will reject the null hypothesis. For our example, α
= .05, which is greater than the p-value of .0414. As a
result, we reject H0 and conclude that the current
percentage of all U.S. drivers aged 16 to 61 years who
have talked on their cell phones while driving is
different from .81.
 EXAMPLE 2
When working properly, a machine that is used to make chips
for calculators does not produce more than 4% defective
chips. Whenever the machine produces more than 4%
defective chips, it needs an adjustment. To check if the
machine is working properly, the quality control department
at the company often takes samples of chips and inspects
them to determine if they are good or defective.
 EXAMPLE
One such random sample of 200 chips taken recently from
the production line contained 12 defective chips.

Find the p-value to test the hypothesis whether or not the

machine needs an adjustment. What would your conclusion
be if the significance level is 2.5%?
 SOLUTION
• Step 1: H0: p ≤ .04
H1: p > .04
• Step 2: To check whether the sample is large, we calculate
the values of np and nq:
np = 200(.04) = 8 > 5
nq = 200(.96) = 192 > 5
Consequently, we will use the normal distribution to
find the p-value for this test.
 SOLUTION

• Step 3: The > sign in the alternative hypothesis indicates

that the test is right-tailed.
pq (.04)(.96)
 pˆ   .01385641
n 200
pˆ  p .06  .04
z  1.44
 pˆ .01385641

p-value = .0749
FIGURE : THE REQUIRED P-
VALUE
 SOLUTION

• Step 4: We can state that for any α greater than .0749 we

will reject the null hypothesis, and for any α less than or
equal to .0749 we will not reject the null hypothesis.

For our example, α = .025, which is less than the p-value of

.0749. As a result, we fail to reject H0 and conclude that
the machine does not need an adjustment.
CRITICAL VALUE APPROACH
 EXAMPLE 3

Refer to Example1. According to a Nationwide Mutual

Insurance Company Driving While Distracted Survey
conducted in 2008, 81% of the drivers interviewed said that
they have talked on their cell phones while driving (The New
York Times, July 19, 2009). The survey included drivers aged
16 to 61 years selected from 48 states. Assume that this
result holds true for the 2008 population of all such drivers in
the United States. In a recent random sample of 1600
drivers aged 16 to 61 years selected from the United States,
83% said that they have talked on their cell phones while
driving.
 EXAMPLE 3
Using the 5% significance level, can you conclude that the
current percentage of such drivers who have talked on their
cell phones while driving is different from 81%.
 SOLUTION
• Step 1: H0 : p = .81
H1 : p ≠ .81
• Step 2: To check whether the sample is large, we calculate
the values of np and nq:
np = 1600(.81) = 1296 > 5
nq = 1600(.19) = 304 > 5
Consequently, we will use the normal distribution to
make the test.
 SOLUTION
• Step 3: The ≠ sign in the alternative hypothesis
indicates that the test is two-tailed. The significance
level is .05. Therefore, the total area of the two
rejection regions is .05.

Area in each tail = α / 2 = .05 / 2 = .025

The critical values of z are -1.96 and 1.96.

FIGURE :THE CRITICAL
VALUES OF Z
 SOLUTION
• Step 4:

pq (.81)(.19)
 pˆ   .00980752
n 1600
pˆ  p .83  .81
z  2.04
 pˆ .00980752
 SOLUTION

• Step 5: the value of test statistic z = 2.04 falls in the

rejection region. As a result, we reject H0 and conclude
that the current percentage of all U.S. drivers aged 16 to
61 years who have talked on their cell phones while
driving is different from .81.
 EXAMPLE 4
Direct Mailing Company sells computers and computer
parts by mail. The company claims that at least 90% of
all orders are mailed within 72 hours after they are
received. The quality control department at the company
often takes samples to check if this claim is valid. A
recently taken sample of 150 orders showed that 129 of
them were mailed within 72 hours.
Do you think the company’s claim is true? Use a 2.5%
significance level.
 SOLUTION
• Step 1: H0 : p ≥ .90
H1 : p < .90
• Step 2: To check whether the sample is large, we
calculate the values of np and nq:
np = 150(.90) = 135 > 5
nq = 150(.10) = 15 > 5
Consequently, we will use the normal distribution to
make the test.
 SOLUTION
• Step 3: Significance level = .025. The < sign in the
alternative hypothesis indicates that the test is left-
tailed, and the rejection region leis in the left tail.
The critical values of z for .0250 area in the left tail is -
1.96.
FIGURE :THE CRITICAL
VALUES OF Z
 SOLUTION
• Step 4:

pq (.90)(.10)
 pˆ   .02449490
n 150
pˆ  p .86  .90
z   1.63
 pˆ .02449490
 SOLUTION
• Step 5: The value of test statistic z = -1.63 is greater
than the critical value of z = -1.96, and it falls in the
nonrejection region. Therefore, we fail to reject H0.
We can state that the difference between the sample
proportion and the hypothesized value of the
population proportion is small, and this difference may
have occurred owing to the chance alone.
 CLASS WORK 1
• A random sample of 500 observations produced a
sample proportion equal to .38.
• Find the critical and observed values of z for each of the
following tests of hypotheses using .05.
 CLASS WORK 2
• Make the following hypothesis tests about p
 CLASS WORK 3
• According to the U.S. Census Bureau, 11% of children in
the United States lived with at least one grandparent in
2009 (USA TODAY, June 30, 2011). Suppose that in a
recent sample of 1600 children, 224 were found to be
living with at least one grandparent. At a 5% significance
level, can you conclude that the proportion of all children
in the United States who currently live with at least one
grandparent is higher than .11?
• Use both the p-value and the critical-value
approaches.