B: Lind

Chapter

Ten
One-Sample
Tests
of Hypothesis
A statement What is a
about the Hypothesis?
value of a
population
parameter
developed for
the purpose of
testing.

Twenty percent of all

The mean monthly customers at Bovine’s Chop
income for systems House return for another
analysts is $6,325. meal within a month.
What is Hypothesis Testing?
Hypothesis testing
Used to determine
Based on whether the hypothesis is
sample a reasonable statement
evidence and and should not be
probability rejected, or is
theory unreasonable and should
be rejected
 Step 1: State null and alternate
hypotheses

Step 2: Select a level of significance

Step 3: Identify the test statistic

Step 4: Formulate a decision rule

Step 5: Take a sample, arrive at a

decision

Do not reject null Reject null and accept alternate

Hypothesis Testing
 Step One: State the null and alternate
hypotheses
Null Hypothesis H0
A statement about the
value of a population
parameter
Alternative Hypothesis H1:
A statement that is
accepted if the sample data
provide evidence that the
null hypothesis is false
 Step One: State the null and alternate
hypotheses
H0 :  = 0
H1 :  = 0
Three The null
possibilities hypothesis
regarding H0 :  < 0 always contains
means H1 :  > 0 equality.

H0 :  > 0
H1 :  < 0 3 hypotheses about means
 Step Two: Select a Level of Significance

Type I Error
Rejecting the null
Level of Significance hypothesis when it
is actually true 
The probability of
rejecting the null
hypothesis when it is Type II Error
actually true; the level of Accepting the null
risk in so doing. hypothesis when it
is actually false 
Step Two: Select a Level of Significance

Researcher
Null Accepts Rejects
Hypothesis Ho Ho
Correct Type I
Ho is true decision error

Type II Correct
Ho is false Error decision
 Risk table
 Step Three: Select the test statistic

z Distribution as a test
statistic

Test statistic X 
z
A value, determined / n
from sample
information, used to The z value is based on the
determine whether sampling distribution of X ,
or not to reject the which is normally
null hypothesis. distributed when the sample
is reasonably large (recall
Examples: z, t, F, 2 Central Limit Theorem).
 Step Four: Formulate the decision rule

Critical value: The dividing point between the region

where the null hypothesis is rejected and the region
where it is not rejected.

Sampling Distribution
Region of
Of the Statistic z, a Do not
rejection
reject
Right-Tailed Test, .05 [Probability=.05]
[Probability =.95]
Level of Significance

0 1.65
Critical value
 Decision Rule

Reject the null Computed -z < Critical -z

hypothesis and
or
accept the
alternate Computed z > Critical z
hypothesis if

Decision Rule
Step Five: Make a decision.
 One-Tailed Tests of Significance
The H1: The mean yearly
alternate commissions earned by
hypothesis, full-time realtors is more
H1, states a than $35,000. (µ>$35,000)
direction
H1: The mean H1: Less than 20
speed of trucks percent of the
traveling on I- customers pay
95 in Georgia cash for their
is less than 60 gasoline purchase.
miles per hour. 20)
(µ<60)
 One-Tailed Tests of Significance

Sampling Distribution
Region of
of the Statistic z, a Do not
rejection
Right-Tailed Test, .05 reject
[Probability=.05]
Level of Significance [Probability =.95]

0 1.65
Critical value

.
 Two-Tailed Tests of Significance
No direction is specified in the alternate hypothesis H1.

H1: The mean

H1: The mean
price for a
amount spent by
gallon of
customers at the
gasoline is not
Wal-mart in
equal to $1.54.
Georgetown is
not equal to $25. (µ ne $1.54).
(µ ne $25).
 Two-Tailed Tests of Significance

Regions of
Nonrejection
and Rejection
for a Two-
Tailed Test,
.05 Level of
Significance
 Test for the population
mean from a large sample
with population standard
deviation known

X 
z
/ n
Testing for the Population Mean: Large Sample,
Population Standard Deviation Known
The processors of Fries’ Ketchup
indicate on the label that the
bottle contains 16 ounces of
Ketchup. The standard deviation
of the process is 0.5 ounces. A
sample of 36 bottles from last
hour’s production revealed a
mean weight of 16.12 ounces per
bottle. At the .05 significance
level is the process out of
control? That is, can we
conclude that the mean amount
per bottle is different from 16
ounces? Example 1
 Step 4
Step 5 State the decision rule.
Make a decision and Reject H0 if z > 1.96
interpret the results. or z < -1.96

Step 3
Identify the test statistic. Because
we know the population standard
deviation, the test statistic is z.
Step 1 Step 2
State the null and the Select the significance level.
alternative hypotheses The significance level is .05.
H0: µ= 16
Example 1
H1: µ = 16
 Step 5: Make a
decision and
interpret the results.

X  1 6 .1 2  1 6 .0 0
z    1 .4 4
 n 0 .5 36

Computed z of 1.44 We cannot

< Critical z of 1.96, conclude the
Do not reject the null mean is different
hypothesis. from 16 ounces.

Example 1
 Testing for the
Population Mean: As long as the
Large Sample, sample size n > 30, z
Population Standard can be approximated
Deviation Unknown using

X 
Here  is unknown,
so we estimate it
z
with the sample
s/ n
standard deviation s.
Roder’s Discount Store
chain issues its own
credit card. Lisa, the
credit manager, wants to
find out if the mean
monthly unpaid balance Should Lisa conclude
is more than $400. The that the population
level of significance is set mean is greater than
at .05. A random check $400, or is it reasonable
of 172 unpaid balances to assume that the
revealed the sample difference of $7 ($407-
mean to be $407 and the $400) is due to chance?
sample standard
deviation to be $38. Example 2
 Step 5 Step 4
Make a decision H0 is rejected if
and interpret the z > 1.65
results.
Step 3
Because the sample is large
we can use the z
distribution as the test
statistic.
Step 1 Step 2
H0: µ < $400 The significance
H1: µ > $400 level is .05.
Example 2
 Step 5
Make a decision X  $407  $400
z   2.42
and interpret the
s n $38 172
results.

Computed z of 2.42
> Critical z of 1.65,
Reject H0.

Lisa can conclude that

the mean unpaid balance
is greater than $400.
Example 2
 Testing for a
Population Mean: The test statistic
Small Sample, is the t
Population distribution.
Standard Deviation
Unknown X 
t
s/ n

The critical value of t is

determined by its degrees of
freedom equal to n-1.
The current rate for producing
5 amp fuses at Neary Electric
Co. is 250 per hour. A new
machine has been purchased
and installed that, according
to the supplier, will increase
the production rate. The
production hours are normally
distributed. A sample of 10
randomly selected hours from
last month revealed that the At the .05 significance
mean hourly production on level can Neary conclude
the new machine was 256 that the new machine is
units, with a sample standard faster?
deviation of 6 per hour. Example 3
 The null hypothesis is rejected if t > 1.833

Step 4
State the decision rule.
There are 10 – 1 = 9 Step 3
degrees of freedom. Find a test statistic. Use
the t distribution since 
Step 1 is not known and n < 30.
State the null and
alternate hypotheses.
Step 2
H0: µ < 250 Select the level of
H1: µ > 250 significance. It is .05.
Example 3
 Step 5 X  256  250
Make a decision
t   3.162
and interpret the
s n 6 10
results.

Computed t of 3.162
>Critical t of 1.833 The mean number
Reject Ho of amps produced is
more than 250 per
hour.

Example 3