Lecture 2

Two procedures to make tests of hypothesis

1. The critical-value approach

2. The p-value approach

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
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. Calculate the value of the test statistic.
4. Determine the rejection and nonrejection
regions.
5. Make a decision.

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Hypothesis tests about μ: σ is
known

Case I. 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)
3. The population from which the sample is selected
is normally distributed.

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Hypothesis tests about μ: σ is known

Case II. If the following two conditions are

fulfilled:

1. The population standard deviation σ is known

2. The sample size is large (i.e., n ≥ 30)

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Hypothesis tests about μ: σ is known

Case III. 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)
3. The population from which the sample is selected
is not normally distributed (or its distribution is
unknown).

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Hypothesis tests about μ: σ is known

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Hypothesis tests about μ: σ is known
In tests of hypotheses about μ, the test
statistic is
x  
z where x 
x n
The value of z thus obtained is also called the
observed value of Z.
Note that above test statistic is applicable
when either the population distribution is
normal or the sample size is large. Also, it
requires knowing σ.
Prem Mann, Introductory Statistics, 7/E
Copyright © 2010 John Wiley & Sons. All right reserved
Example 9-3
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. Assume
that the population standard deviation is 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?

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Solution

 Step 1: H0 : μ = 12.44 H1 : μ ≠ 12.44

 Step 2: Since the sample size is large and
population standard deviation σ is known,
we can use the normal distribution to
perform this test .

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Solution

 Step 3:
 Area in each tail = α / 2= 0.02 / 2 = 0.01
 The z values for the two critical points are -
2.33 and 2.33

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Figure 9.9

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Solution
 Step 4:
 2.65
x   .21637159
n 150
x   13.71  12.44
z  5.87
x .21637159

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Solution
 Step 5: Since the observed value of the
test statistic (z = 5.87) falls in the
rejection region, we reject H0 and
conclude that the mean length of all such
calls is not equal to 12.44 minutes.

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Example 9-4
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?

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Solution

 Step 1: H0 : μ ≥ $300,000
H1 : μ < $300,000
 Step 2: Since the population distribution is
normal and the population standard
deviation σ is known, we can use the
normal distribution to perform this test.

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Solution

 Step 3:
 Area in the left tail = α = 0.025
 The critical value of z is -1.96

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Figure 9.10

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Solution
 Step 4:

 80,000
x   $16,000
n 25
x   288,000  300,000
z   .75
x 16,000

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Solution
 Step 5: Since the observed value of test
statistic (z = -0.75) falls in the
nonrejection region, 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.

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Hypothesis testing using the p-value
approach

P–value is the smallest significance level at which

the null hypothesis is rejected.

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
The p–value for a right-tailed test

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
The p–value for a two-tailed test

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Steps to perform a test of hypothesis
in 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.

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Example 9-1
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?

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Solution
 Step 1: H0: μ = 90 H1: μ ≠ 90
 Step 2: Since the population distribution is
normal and the population standard
deviation σ is known, we can use the
normal distribution to perform this test.

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
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

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Figure 9-7: The p-value for a two-
tailed test

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Solution
Example 9-2
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. Find the p–value for this test. What
will your decision be if α = .01? What if α = .05?

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Solution
 Step 1: H0: μ ≥ 10 H1: μ < 10
 Step 2: Since the sample size is large and
the population standard deviation σ is
known, we can use the normal distribution
to perform this test.

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Solution
 Step 3:
 2.4
x   .40
n 36
x   9.2  10
z   2.00
x .40
p-value = .0228

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Figure 9-8: The p-value for a left-tailed
test

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
Solution