Fundamentals of

Hypothesis Testing:
One Sample Tests
 The 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 = $52

§ population proportion

Example: The proportion of adults in this city with

cell phones is π = .68
 The Null Hypothesis, H0
§ States the assumption (numerical) to be tested

Example: The mean number of TV sets in U.S.

Homes is equal to three.
H0 : μ  3

§ Is always about a population parameter, not about

a sample statistic.
The Null Hypothesis, H0

§ Begin with the assumption that the null

hypothesis is true
§ Similar to the notion of innocent until
proven guilty
§ It 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 mean 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
Level of Significance ()

§ Represent the chance of rejecting the true

null hypothesis
§ The probability of falsely rejecting the null
hypothesis
§ The probability of committing Type I error
§ It show how likely a result is due to chance
§ Traditionally, the maximum allowed level of
alpha the researcher should commit is set at
1% or 5%
Errors in Decision Making
§ Type I Error
§ Reject a true null hypothesis
§ Considered a serious type of error
§ The probability of a Type I Error is 

§ Called level of significance of the test

§ Set by researcher in advance
§ Type II Error
§ Failure to reject false null hypothesis
§ The probability of a Type II Error is β
 Errors in Decision Making

Possible Hypothesis Test Outcomes

Actual Situation

Decision H0 True H0 False

Do Not No Error Type II Error

Reject H0 Probability 1 - α Probability β
Reject H0 Type I Error No Error
Probability α Probability 1 - β
Test Statistic

§ A test statistic is a sample statistic computed

from the sample data.
§ Its value measures the difference between the
data and what is expected under the null
hypothesis
§ The value of the test statistic is used in
determining whether or not we accept or
reject Ho
Critical value, critical region
and noncritical region
§ The critical value separates the critical
region from the noncritical region. The
symbol for critical value is C.V.
§ It is the threshold that separates the region of
values where we will reject the null
hypothesis from the region where we will not
reject the null hypothesis
Critical value, critical region
and noncritical region
§ The critical or rejection region is the range
of values of the test value that indicates that
there is a significant difference and that the
null hypothesis should be rejected.
§ Is the region in which the null hypothesis is
rejected if the test statistic falls within
§ The size of the area of the critical region is
determined by the level of significance
Critical value, critical region
and noncritical region
§ The noncritical or nonrejection region is
the range of values of the test value that
indicates that the difference was probably
due to chance and that the null hypothesis
should not be rejected.
P-value

§ The p-value represents the chance of

generating a value as extreme as the
observed value of the test statistic or
something more extreme if the null
hypothesis is true.
§ The actual probability of type I error
committed by the researcher
The Hypothesis Testing
Process
§ Claim: The population mean age is 50.
§ H0: μ = 50, H1: μ ≠ 50
§ Sample the population and find sample mean.

Population

Sample
 The Hypothesis Testing
Process
§ Suppose the sample mean age was X = 20.
§ This is significantly lower than the claimed mean
population age of 50.
§ If the null hypothesis were true, the probability of
getting such a different sample mean would be very
small, so you reject the null hypothesis .
§ In other words, getting a sample mean of 20 is so
unlikely if the population mean was 50, you
conclude that the population mean must not be 50.
 The Hypothesis Testing
Process
Sampling
Distribution of X

X
20 μ = 50
If H0 is true ... then you reject
If it is unlikely that you
the null hypothesis
would get a sample
that μ = 50.
mean of this value ... ... if in fact this were
the population mean…
The Test Statistic and
Critical Values
§ If the sample mean is close to the assumed
population mean, the null hypothesis is not
rejected.
§ If the sample mean is far from the assumed
population mean, the null hypothesis is
rejected.
§ How far is “far enough” to reject H0?
§ The critical value of a test statistic creates a
“line in the sand” for decision making.
The Test Statistic and
Critical Values
Distribution of the test statistic

Region of Region of
Rejection Rejection

Critical Values
Commonly used alpha levels

Confidence Confidence Level of

Level Coefficient alpha Z value

80% .80 .20 1.28

90% .90 .10 1.645
95% .95 .05 1.96
98% .98 .02 2.33
99% .99 .01 2.58
99.8% .998 .002 3.08
99.9% .999 .001 3.27
Critical Region
Types of Test
Level of One-tailed Two-tailed
significance right left
.05 Z<= -1.645 Z>=1.645 Z<= -1.96 or
z>= 1.96
.01 Z<= -2.326 Z>= 2.326 Z <= 2.576 or z
>= 2.576
 Level of Significance, α
Claim: The population
/2 Represents
mean age is 50. critical value
/2
H0: μ = 50
H1: μ ≠ 50 Two-tail test Rejection
0 region is
shaded
H0: μ ≤ 50 
H1: μ > 50 Upper-tail test

H0: μ ≥ 50
Lower-tail test 
H1: μ < 50
0
Solving Hypothesis – Testing
Problems (Traditional Method)
§ Step1 state the hypotheses and identify the
claim
§ Step 2 Find the critical value(s) from the
appropriate table
§ Step 3 Compute the test value
§ Step 4 Make the decision.
§ Step 5 Summarize the result
Solving Hypothesis – Testing
Problems (P-Value Method)
§ Step1 state the hypotheses and identify the
claim
§ Step 2 Compute the test value.
§ Step 3 Find the P-value.
§ Step 4 Make the decision.
§ Step 5 Summarize the result
§ Decision Rule When Using a P-value
§ If p < alpha, reject Ho
§ If p > alpha, do not reject Ho
 Hypothesis Testing: σ Known

For two tail test for the mean, σ known:

§ Convert sample statistic ( X ) to test statistic

§ Determine the critical Z values for a specified

level of significance  from a table
§ Decision Rule: If the test statistic falls in the rejection
region, reject H0 ; otherwise do not reject H0
 Hypothesis Testing: σ Known
H0: μ = 3
§ There are two H1: μ ≠ 3
cutoff values
(critical values),
defining the /2 /2
regions of
rejection
3 X
Reject H0 Do not reject H0 Reject H0
-Z +Z Z
0
Lower Upper
critical critical
value value
 Hypothesis Testing: σ Known

Example: Test the claim that the true mean weight of

chocolate bars manufactured in a factory is 3 ounces.

§ State the appropriate null and alternative hypotheses

§ H0: μ = 3 H1: μ ≠ 3 (This is a two tailed test)
§ Specify the desired level of significance
§ Suppose that  = .05 is chosen for this test
§ Choose a sample size
§ Suppose a sample of size n = 100 is selected
 Hypothesis Testing: σ Known
§ Determine the appropriate technique
§ σ is known so this is a Z test
§ Set up the critical values
§ For  = .05 the critical Z values are ±1.96
§ Collect the data and compute the test statistic
§ Suppose the sample results are
n = 100, X = 2.84
(σ = 0.8 is assumed known from past company records)
So the test statistic is:
 Hypothesis Testing: σ Known
§ Is the test statistic in the rejection region?

 = .05/2  = .05/2

Reject H0 if Reject H0 Do not reject H0 Reject H0

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: σ Known

§ Reach a decision and interpret the result

§ Since Z = -2.0 < -1.96, you reject the null
hypothesis and conclude that there is sufficient
evidence that the mean weight of chocolate
bars is not equal to 3.
 Hypothesis Testing: σ Known
6 Steps of Hypothesis Testing:
1. State the null hypothesis, H0 and state the
alternative hypotheses, H1
2. Choose the level of significance, α, and the sample
size n.
3. Determine the appropriate statistical technique and
the test statistic to use
4. Find the critical values and determine the rejection
region(s)
Hypothesis Testing: σ Known

5. Collect data and compute the test statistic from the

sample result
6. Compare the test statistic to the critical value to
determine whether the test statistic falls in the
region of rejection. Make the statistical decision:
Reject H0 if the test statistic falls in the rejection
region. Express the decision in the context of the
problem
Hypothesis Testing: σ Known
p-Value Approach
§ The p-value is the probability of obtaining a
test statistic equal to or 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
Hypothesis Testing: σ Known
p-Value Approach

§ Convert Sample Statistic (ex. X) to Test

Statistic (ex. Z statistic )
§ Obtain the p-value from a table
§ Compare the p-value with 
§ If p-value <  , reject H0
§ If p-value   , do not reject H0
 Hypothesis Testing: σ Known
p-Value Approach
§ 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 /2 = .025 /2 = .025

P(Z   2.0)  .0228 .0228 .0228

P(Z  2.0)  .0228

p-value
=.0228 + .0228 = .0456 -1.96 0 1.96 Z
-2.0 2.0
 Hypothesis Testing: σ Known
p-Value Approach
§ Compare the p-value with 
§ If p-value <  , reject H0
§ If p-value   , do not reject H0

Here: p-value = .0456 /2 = .025 /2 = .025

 = .05 .0228 .0228
Since .0456 < .05, you
reject the null
hypothesis
-1.96 0 1.96 Z
-2.0 2.0
 Hypothesis Testing: σ Known
Confidence Interval Connections

§ For X = 2.84, σ = 0.8 and n = 100, the 95%

confidence interval is:
0.8 0.8
2.84 - (1.96) to 2.84  (1.96)
100 100

2.6832 ≤ μ ≤ 2.9968

§ Since this interval does not contain the hypothesized

mean (3.0), you reject the null hypothesis at  = .05
 Hypothesis Testing: σ Known
One Tail Tests
§ In many cases, the alternative hypothesis
focuses on a particular direction

This is a lower-tail test since the

H0: μ ≥ 3
alternative hypothesis is focused on the
H1: μ < 3 lower tail below the mean of 3

H0: μ ≤ 3 This is an upper-tail test since the

alternative hypothesis is focused on the
H1: μ > 3
upper tail above the mean of 3
Hypothesis Testing: σ Known
Lower Tail Tests
§ There is only one critical value, since the
rejection area is in only one tail.

Reject H0 Do not reject

-Z H0 Z
μ X
Critical value
Hypothesis Testing: σ Known
Upper Tail Tests
§ There is only one critical value, since the
rejection area is in only one tail.

Do not reject Reject

Z H0 Z H0
X μ

Critical value
 Hypothesis Testing: σ Known
Upper Tail Test Example
A phone industry manager thinks that customer
monthly cell phone bills have increased, and now
average more than $52 per month. The company
wishes to test this claim. Past company records
indicate that the standard deviation is about $10.

Form hypothesis test:

H0: μ ≤ 52 the mean is less than or equal to $52 per month
H1: μ > 52 the mean is greater than $52 per month
(i.e., sufficient evidence exists to support the
manager’s claim)
Hypothesis Testing: σ Known
Upper Tail Test Example
§ Suppose that  = .10 is chosen for this test
§ Find the rejection region:
Reject H0

1- = .90
 = .10

Do not reject H0 Reject H0

0 Z
 Hypothesis Testing: σ Known
Upper Tail Test Example
What is Z given a = 0.10?
.90 .10
Z .07 .08 .09
a = .10
1.1 .8790 .8810 .8830
.90
1.2 .8980 .8997 .9015
z 0 1.28
1.3 .9147 .9162 .9177
Critical Value
= 1.28
Hypothesis Testing: σ Known
Upper Tail Test Example
§ 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 from past company records)
§ Then the test statistic is:
 Hypothesis Testing: σ Known
Upper Tail Test Example
§ Reach a decision and interpret the result:
Reject H0
1- = .90
 = .10

0 1.28
Z = .88

Do not reject H0 since Z = 0.88 ≤ 1.28

i.e.: there is not sufficient evidence that the mean bill is greater than $52
Hypothesis Testing: σ Known
Upper Tail Test Example
§Calculate the p-value and compare to 
p-value = .1894

Reject H0 P( X  53.1)
 = .10
 53.1 52.0 
 P Z  
 10/ 64 
0
Do not reject
1.28
Reject  P(Z  0.88)  1  .8106
H0 H0
Z = .88  .1894

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

Hypothesis Testing:
σ Unknown
§ If the population standard deviation is
unknown, you instead use the sample
standard deviation S.
§ Because of this change, you use the t
distribution instead of the Z distribution to
test the null hypothesis about the mean.
§ All other steps, concepts, and conclusions are
the same.
Hypothesis Testing:
σ Unknown
§ Recall that the t test statistic with n-1
degrees of freedom is:
 Hypothesis Testing:
σ Unknown Example
The mean 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.

(A stem-and-leaf display and a normal probability plot

indicate the data are approximately normally distributed )

H0: μ = 168
H1: μ ¹ 168
 Hypothesis Testing:
σ Unknown Example
H0: μ = 168
Determine the regions of rejection
H1: μ ≠ 168
§ α = 0.05
§ n = 25 α/2=.025 α/2=.025

§  is unknown, so
use a t statistic
Reject H0 Reject H0
§ Critical Value: -t n-1,α/2
Do not reject H0 t n-1,α/2
0
t24 = ± 2.0639 -2.0639 2.0639
Hypothesis Testing:
σ Unknown Example

a/2=.025 a/2=.025

-t n-1,α/2 t n-1,α/2
0 1.46
-2.0639 2.0639
Do not reject H0: not sufficient evidence
that true mean cost is different from $168
 Hypothesis Testing:
Connection to Confidence Intervals

§ For X = 172.5, S = 15.40 and n = 25, the 95%

confidence interval is:
15.4 15.4
172.5 - (2.0639) to 172.5  (2.0639)
25 25

166.14 ≤ μ ≤ 178.86

§ Since this interval contains the hypothesized

mean (168), you do not reject the null
hypothesis at  = .05
Hypothesis Testing:
σ Unknown
§ Recall that you assume that the sample
statistic comes from a random sample from a
normal distribution.
§ If the sample size is small (< 30), you should
use a box-and-whisker plot or a normal
probability plot to assess whether the
assumption of normality is valid.
§ If the sample size is large, the central limit
theorem applies and the sampling
distribution of the mean will be normal.
Hypothesis Testing
Proportions
§ 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 π
 Hypothesis Testing
Proportions
§ Sample proportion in the success category is denoted by p

X number of successes in sample

p 
n sample size

§ When both nπ and n(1-π) are at least 5, p can be

approximated by a normal distribution with mean and
standard deviation
 (1   )
μp   σp 
n
Hypothesis Testing
Proportions
§ The sampling distribution of p is
approximately normal, so the test statistic is
a Z value:

p 
Z
 (1   )
n
 Hypothesis Testing
Proportions Example
A marketing company claims that it receives
8% responses from its mailing. To test this
claim, a random sample of 500 were
surveyed with 30 responses. Test at the 
= .05 significance level.

First, check:
n π = (500)(.08) = 40
n(1-π) = (500)(.92) = 460
 Hypothesis Testing
Proportions Example

H0: π = .08 H1: π ≠ .08 Determine region of rejection

α = .05
Reject Reject
n = 500, p = .06

Critical Values: ± 1.96 .025 .025

0 z
-1.96 1.96
 Hypothesis Testing
Proportions Example
Test Statistic: Decision:
p  .06  .08 Do not reject H0 at
Z   1.648
 (1   ) .08(1  .08)  = .05
n 500 Conclusion:
There isn’t sufficient
evidence to reject the
.025 .025
company’s claim of
0 z 8% response rate.
-1.96 1.96
-1.646