One-Sample Tests of Hypothesis
Chapter 10
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Learning Objectives
LO10-1 Explain the process of testing a hypothesis
LO10-2 Apply the six-step procedure for testing a
hypothesis
LO10-3 Distinguish between a one-tailed and a two-
tailed test of hypothesis
LO10-4 Conduct a test of a hypothesis about a
population mean
LO10-5 Compute and interpret a p-value
LO10-6 Use a t-statistic to test a hypothesis
LO10-7 Compute the probability of a Type II error
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Hypothesis Testing
Hypothesis testing begins with a hypothesis statement
about a population parameter
HYPOTHESIS A statement about a population parameter subject to
verification
Examples
The mean speed of automobiles passing milepost 150 on
the West Virginia Turnpike is 68 mph
The mean cost to remodel a kitchen is $20,000
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Hypothesis Testing
The objective of hypothesis testing is to verify the validity
of a statement about a population parameter
HYPOTHESIS TESTING A procedure based on sample evidence and
probability theory to determine whether the hypothesis is a reasonable
statement.
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Step 1 of the Six-Step Process
State the null hypothesis (H0) and the alternate
hypothesis (H1)
NULL HYPOTHESIS A statement about the value of a population
parameter developed for the purpose of testing numerical evidence.
The null hypothesis always includes the equal sign
For example; =, ≥, or ≤ will be used in H0
ALTERNATE HYPOTHESIS A statement that is accepted if the sample
data provide sufficient evidence that the null hypothesis is false.
The alternate hypothesis never includes the equal sign
For example; ≠, <, or > is used in H1
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Step 2 of the Process
Next, you select the level of significance, α
LEVEL OF SIGNIFICANCE The probability of rejecting the null
hypothesis when it is true.
Sometimes called the level of risk
Can be any value between 0 and 1
Traditionally,
.05 is used for consumer research projects
.01 for quality assurance
.10 for political polling
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Possible Error in Hypothesis Testing
Since the researcher cannot study every item or
individual in the population, error is possible
TYPE I ERROR Rejecting the null hypothesis, H0, when it is true.
Type I error is designated with the Greek letter alpha, α
TYPE II ERROR Not rejecting the null hypothesis when it is false.
Type II error is designated with the Greek letter beta, β
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Step 3 of the Process
Then, select the test statistic
TEST STATISTIC A value, determined from sample information, used to
determine whether to reject the null hypothesis.
In hypothesis testing for the mean, μ, when σ is known,
the test statistic z is computed with the following formula
We can determine whether the distance between xത and μ
is statistically significant by finding the number of standard
deviations xത is from μ
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Step 4 of the Process
Formulate the decision rule
The decision rule is a statement of specific
conditions under which the null hypothesis is
rejected and the conditions under which it is not
rejected
The region or area of rejection defines the location of all
the values that are either so large or so small that their
probability of occurrence under a true null hypothesis is
remote
CRITICAL VALUE The dividing point between the region where the
null hypothesis is rejected and the region where it is not rejected.
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Critical Value
The sampling distribution of the statistic z follows the
normal distribution
Here, an α of .05 is used in a one-tailed test
The value 1.645 separates the regions where the null
hypothesis is rejected and where it is not rejected
The value 1.645 is the critical value
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Steps 5 & 6 of the Six-Step Process
Step 5 Make a decision
First, select a sample and compute the value of the test
statistic
Compare the value of the test statistic to the critical
value
Then, make the decision regarding the null hypothesis
Step 6 Interpret the results
What can we say or report based on the results of the
statistical test?
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One-Tailed and Two-Tailed Tests
H0: ≥ 60,000 miles H0: = $65,000 per year H0: ≤ 453 grams
H1: < 60,000 miles H1: ≠ $65,000 per year H1: > 453 grams
with an α = .05 with an α = .05 with an α = .05
Left-tailed test Two-tailed test Right-tailed test
Note that the total area in the normal distribution is 1.0000.
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Two-Tailed Test Example, σ Known
Jamestown Steel Company manufactures and assembles desks and other office
equipment at several plants in New York State. At the Fredonia plant, the weekly
production of the Model A325 desk follows a normal distribution with a mean of
200 and a standard deviation of 16. New production methods have been
introduced and the vice president of manufacturing would like to investigate
whether there has been a change in weekly production of the Model A325. Is the
mean number of desks produced different from 200 at the .01 significance level?
Step 1: State the null hypothesis and alternate hypothesis.
H0: μ = 200 desks
H1: μ ≠ 200 desks
Step 2: Select the level of significance. Here α = .01
Step 3: Select the test statistic. In this example, we’ll use z
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Two-Tailed Test Example, σ Known
Step 4: Formulate the decision rule by first determining the critical values of z.
Decision Rule: If the computed value of z is not between -2.575 and 2.576, reject
the null hypothesis. If z falls between -2.576 and 2.576, do not reject the null
hypothesis.
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Two-Tailed Test Example, σ Known
Step 5: Take sample, compute the test statistic, make decision.
The mean number of desks produced last year (50 weeks because the plant was
shut down 2 weeks for vacation) is 203.5. The standard deviation of the
population is 16 desks per week. Compute z with formula 10-1.
xഥ − μ 203.5−200
z= = = 1.547
σ/ n 16/ 50
Decision: Because 1.547 does not fall in the rejection region, we decide not to
reject H0.
Step 6: Interpret the result.
We did not reject the null hypothesis, so we have failed to show that the
population mean has changed from 200 per week.
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One-Tailed Test
Suppose instead of wanting to know if there had been a change in the mean
number of desks assembled, the vice president wanted to know if there had
been an increase in the number of units assembled. Can we conclude, because
of the improved production methods, that the mean number of desks assembled
in the last 50 weeks was more than 200? Use α = .01.
Before: Now:
A two-tailed test A one-tailed test
H0: = 200 desks H0: ≤ 200 desks
H1: ≠ 200 desks H1: > 200 desks
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Example
The manufacturer of the X-15 steel-belted truck tire
claims that the mean mileage the tire can be driven
before the tread wears out is 60,000 miles. Assume the
mileage wear follows a normal distribution and the
standard deviation is 5,000 miles. Crosset Truck Company
bought 48 tires and found that the mean mileage for its
truck is 59,500.
Is Crosset’s experience different from that claimed by the
manufacturer at the 0.5 significance level?
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The p-Value in Hypothesis Testing
p-VALUE The probability of observing a sample value as extreme as, or
more extreme than the value observed, given that the null hypothesis is
true.
Compare the p-value with the level of significance, α
If the p-value is smaller than the significance level, reject H0
If the p-value is larger than α, H0 is not rejected
A p-value not only results in a decision about H0, but
gives additional insight about the strength of that decision
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Finding a p-Value
In the previous example about desk production, the
computed z was 1.547 and H0 was not rejected
Round the computed z-value to two decimal places, 1.55
Using the z-table, find the probability of finding a z-value
of 1.55 or more by .5000 - .4394 = .0606
Since this is a two-tailed test 2(.0606) = .1212
In this chart, we can easily compare the p-value with the
level of significance
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Hypothesis Testing, σ Unknown
When testing a hypothesis about a population mean
The major characteristics of the t distribution are
It is a continuous distribution
It is bell-shaped and symmetrical
There is a family of t distributions, depending on the
number of degrees of freedom
It is flatter, or more spread out, than the standard
normal distribution
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Hypothesis Testing, σ Unknown Example
The McFarland Insurance Company Claims Department reports the mean cost to
process a claim is $60. An industry comparison showed this amount to be larger than
most other insurance companies, so the company instituted cost-cutting measures. To
evaluate the cost-cutting measures, a random sample was taken of 26 claims processed
last month and the cost to process each claim was recorded (see below).
At the .01 significance level, is it reasonable to conclude the mean cost to process a
claim is now less than $60?
Step 1: State the null hypothesis and the alternate hypothesis
H0: μ ≥ $60
H1: μ < $60
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Hypothesis Testing, σ Unknown Example
Step 2: Select the level of significance; we will use .01
Step 3: Select the test statistic; we will use t
Step 4: Formulate the decision rule; reject H0 if t is less than -2.485
Step 5: Take sample, make decision; Do not reject H0
Step 6: Interpret the result; The test results do not allow the claims manager to
conclude the cost-cutting measures have been effective.
xഥ − μ $56.423−$60
t= = = -1.82
s/ n $10.41/ 26
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Type I and Type II Errors
Type I error occurs when a true null hypothesis is
rejected
The probability of making a Type I error is equal to the level of
significance, α
A Type II error occurs when a false null hypothesis is not
rejected
The probability of making a Type II error is designated, β
The likelihood of a Type II error must be calculated comparing
the hypothesized distribution to an alternate distribution based
on sample results and can be calculated with this formula
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Type II Error Example
Western Wire Products purchases steel bars to make cotter pins. Past
experience indicates that the mean tensile strength of all incoming shipments is
10,000 psi and that the standard deviation is 400 psi. To monitor the quality of
the cotter pins, samples of 100 pins are randomly selected and tested for their
strength. Using a 0.05 significance level, accept the shipment if the sample mean
strength falls between the critical values 9.922 psi and 10.078 psi. If the sample
mean does not fall between the critical values, we conclude the shipment does
not meet the quality standard.
The sample mean, 9.900 psi, is not
within the specified range. To calculate
the probability of a Type II error, assume
the sample mean is the true mean (see
graph B). Determine the probability of
the sample mean falling between 9.900
and 9.922. Then subtract this probability
from .5000 to arrive at the probability
of making a Type II error, .2912
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