CHAPTER 1:

HYPOTHESIS TESTS ABOUT

THE MEAN AND PROPORTION
HYPOTHESIS TESTS: AN
INTRODUCTION
 Two Hypotheses
 Rejection and Nonrejection
Regions
 Two Types of Errors
 Tails of a Test

2
 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.

3
 Two Hypotheses cont.
Definition
An alternative hypothesis is a claim
about a population parameter that will
be true if the null hypothesis is false.

4
 Rejection and Nonrejection
Regions
Figure 1.1 Nonrejection and rejection regions for the
court case.
Not enough evidence Enough evidence to
to declare the person declare the person
guilty and, hence, the guilty and, hence, the
null hypothesis is not null hypothesis is
rejected in this rejected in this Level of
region. region. evidenc
0
e
Nonrejection regionC Rejection region

Critical
point
5
 Two Types of Errors
Table 1.1
Actual Situation
The Person
The Person
Is Not
Is Guilty
Guilty
The
Correct Type II or β
person is
decision error
Court’s not guilty
decision The
Type I or α Correct
person is
error decision
guilty 6
 Two Types of Errors cont.
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.
7
Two Types of Errors cont.
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.

8
 Table 1.2
Actual Situation
H0 Is True H0 Is False
Do not reject Correct Type II or β
Decisio H0 decision error
n Type I or Correct
Reject H0
α error decision

9
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.

10
 A Two-Tailed Test
 According to the U.S. Bureau of the Census,
the mean family size in the United States
was 3.18 in 1998. A researcher wants to
check whether or not this mean has
changed since 1998.
 The mean family size has changed if it has
either increased or decreased during the
period since 1998. This is an example of a
two tailed test.
11
 A Two-Tailed Test cont.
 Let μ be the current mean family size
for all families. The two possible
decisions are
 H0 : μ = 3.18 (The mean family size has not
changed)
 H1 : μ ≠ 3.18 (The mean family size has
changed)

12
 A Two-Tailed Test cont.
 Whether a test is two – tailed or one –
tailed is determined by the sign in the
alternative hypothesis.
 If the alternative hypothesis has a not
equal to (≠) sign, it is a two – tailed
test.

13
Figure 1.2 A two-tailed test.

This shaded This shaded area

area is α / 2 is α / 2

Rejectio μ = 3.18 Rejectio x

n region Nonrejection n region
C1 region C2
These two values are
14
called the critical
 A Left-Tailed Test
A soft-drink company claims that the
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.

15
 A Left-Tailed Test cont.
 Let μ be the mean amount of soda in
all cans. The two possible decisions
are
 H0 : μ = 12 ounces (The mean is not less
than 12
ounces)
 H1 : μ < 12 ounces (The mean is less
than 12 ounces)

16
 A Left-Tailed Test cont.
When the alternative hypothesis has a
less than (<) sign, the test is always
left – tailed.

17
Figure 1.3 A left-tailed test.

Shaded
area is α

Rejectio μ = 12 x
n region Nonrejection region
C
Critical value
18
 A Right-Tailed Test
According to a 1999 study by the
American Federation of Teachers, the
mean starting salary of school teachers
in the U.S. was $25,735 during 1997 –
98. Suppose we want to test whether
the current mean starting salary of all
school teachers in the United States is
higher than $25,735.

19
 A Right-Tailed Test cont.
 Let μ be the current mean starting salary
of school teachers in the United States.
The two possible decisions are
 H0 : μ = $25,735 (The current mean starting
salary is not higher
than $25,735)
 H1 : μ > $25,735 (The current mean starting
salary is higher
than $25,735)
20
 A Right-Tailed Test cont.
When the alternative hypothesis has a
greater than (>) sign, the test is
always right – tailed.

21
Figure 1.4 A right-tailed test.

Shaded
area is α

μ= Rejectio x
$25,735
Nonrejection region n region
C
Critical value
22
 Table 5.3

Two-Tailed Left-Tailed Right-Tailed

Test Test Test
Sign in the
null = = or ≥ = or ≤
hypothesis H0
Sign in the
alternative ≠ < >
hypothesis H1
Rejection In the left In the right
In both tails
region tail tail
23
 HYPOTHESIS TESTS ABOUT A
POPULATION MEAN: LARGE
SAMPLES
Test Statistic
In tests of hypotheses about μ for large
samples, the random variable
x  x 
z or z 
x sx
where  x  / n and s x  s / 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.
24
 HYPOTHESIS TESTS ABOUT A
POPULATION MEAN: LARGE
SAMPLES cont.
Steps to Perform a Test of Hypothesis with
Predetermined α
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.
25
 Example 1-3
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 1999 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.
26
 Example 1-3
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 5% significance level, can
you conclude that the mean length of
all current long-distance calls is
different from 12.44 minutes?
27
 Solution 1-3
 H0 : μ = 12.44
 The mean length of all current long-
distance calls is 12.44 minutes
 H1 : μ ≠ 12.44
 The mean length of all current long-
distance calls is different from 12.44
minutes

28
 Solution 1-3
 α = .05
 The ≠ sign in the alternative
hypothesis indicates that the test is
two-tailed
 Area in each tail = α / 2= .05 / 2 = .025
 The z values for the two critical points
are -1.96 and 1.96

29
Figure 1.9
Look for this area in the
normal distribution table
to find the critical values
of z

α /2 = .025 α /2 = .025

.4750 .4750
μ = 12.44 x
Reject H0 Do not reject H0 Reject H0

-1.96 0 z
1.96 Two critical values of z 30
 Calculating the Value of the
Test Statistic
For a large sample, the value of the test
statistic z for x for a test of hypothesis
about μ is computed as follows:
x 
z if  is known
x
x 
z if  is not known
sx

where  x  / n and s x  s / n
This value of z for x is also called the
observed value of z.
31
 Solution 1-3

s 2.65
sx   .21637159
n 150 From H0

x   13.71  12.44
z  5.87
sx .21637159

32
 Solution 1-3
 The value of z = 5.87
 It is greater than the critical value
 It falls in the rejection region
 Hence, we reject H0

33
Example 1-4
According to a salary survey by National
Association of Colleges and Employers,
the average salary offered to computer
science majors who graduated in May
2002 was $50,352 (Journal of
Accountancy, September 2002).
Suppose this result is true for all
computer science majors who
graduated in May 2002.
34
 Example 1-4
A random sample of 200 computer
science majors who graduated this year
showed that they were offered a mean
salary of $51,750 with a standard
deviation of $5240. Using the 1%
significance level, can you conclude that
the mean salary of this year’s computer
science graduates is higher than
$50,352?
35
 Solution 1-4
 H0: μ = $50,352
 The mean salary offered to this year’s
computer science graduates is $50,352
 H1: μ > $50,352
 The mean salary offered to this year’s
computer science graduates is higher
than $50,352

36
 Solution 1-4

α = .01
 The > sign in the alternative
hypothesis indicates that the test is
right-tailed
 Area in the right tail = α = .01

The critical value of z is
approximately 2.33
37
Figure 1.10

α = .01

.4900

μ = $50,352 x
Do not reject H0 Reject H0

0 z
2.33 Critical value of z 38
 Solution 1-4

s 5240
sx   $370.5239533
n 200 From H0

x   51,750  50,352
z  3.77
sx 370.5239533

39
 Solution 1-4
 The value of the test statistic z = 3.77
 It is larger than the critical value of z =
2.33
 it falls in the rejection region
 Consequently, we reject H0

40
 Example 1-5
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 100 families selected from this
city produced a mean net worth of
$288,000 with a standard deviation of
$80,000. Using the 2.5% significance
level, can you conclude that the mayor’s
claim is false?
41
 Solution 1-5
 H0: μ ≥ $300,000
 The mayor's claim is true. The mean net
worth is at least $300,000
 H1: μ < $300,000
 The mayor’s claim is false. The mean net
worth is less than $300,000

42
 Solution 1-5
 α = .025
 The < sign in the alternative
hypothesis indicates that the test is
left-tailed
 The critical value of z is -1.96

43
 Figure 1.11

α = .025

.4750

μ = $300,000 x
Reject H0 Do not reject H0

-1.96 0 z
Critical value of z 44
 Solution 1-5

s 80,000
sx   $8000
n 100 From H 0

x   288,000  300,000
z   1.50
sx 8000

45
 Solution 1-5

The value of the test statistic z = -
1.50
 It is greater than the critical value
 It falls in the nonrejection region
 As a result, we fail to reject H0

46
 HYPOTHESIS TEST ABOUT A
POPULATION MEAN: SMALL
SAMPLES
Conditions Under Which the t Distribution Is
Used to Make Tests of Hypothesis About μ
The t distribution is used to conduct a test
of hypothesis about μ if
1. The sample size is small (n < 30)
2. The population from which the sample is drawn is
(approximately) normally distributed.
3. The population standard deviation σ is unknown.

47
HYPOTHESIS TEST ABOUT A
POPULATION MEAN: SMALL
SAMPLES cont.
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.
48
 Example 1-6
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.

49
 Solution 1-6
 H0: μ = 12.5
(The mean walking age is 12.5
months)
 H1: μ ≠ 12.5
(The mean walking age is
different from 12.5 months)

50
 Solution 1-6
 The sample size is small
 The population is approximately
normally distributed
 The population standard deviation is
not known
 Hence, we use the t distribution to
make the test

51
 Solution 1-6
 α = .01.
 The ≠ sign in the alternative hypothesis
indicates that the test is two-tailed.
 Area in each tail = α / 2 = .01 / 2 = .005
 df = n – 1 = 18 – 1 = 17
 Critical values of t are -2.898 and 2.898

52
 Figure 1.12

Reject Do not reject H0 Reject

H0 H0
α/2 = .005 α/2 = .005

-2.898 0 2.898 t
Two critical values
of t

53
 Solution 1-6

s .8
sx   .18856181
n 18 From H0

x   12.9  12.5
t  2.121
sx .18856181

54
 Solution 1-6
 The value of the test statistic t =
2.121
 It falls between the two critical points
 It is in the nonrejection region.
 Consequently, we fail to reject H0.

55
 Example 1-7
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 15 such batteries
to check this claim. It found the mean life of
these 15 batteries to be 63 months with a
standard deviation of 2 months. At the 5%
significance level, can you conclude that the
claim of this company is true? Assume that
the life of such a battery has an
approximately normal distribution.
56
 Solution 1-7
 H0: μ ≥ 65
 The mean life is at least 65 months
 H1: μ < 65
 The mean life is less than 65 months

57
 Solution 1-7
 α = .05.
 The < sign in the alternative
hypothesis indicates that the test is
left-tailed.
 Area in the left tail = α = .05
 df = n – 1 = 15 – 1 = 14

The critical value of t is -1.761.
58
 Figure 1.13

Reject Do not reject H0

H0

α = .05

-1.761 0 t
Critical value of t

59
 Solution 1-7

s 2
sx   .51639778
n 15 From H0

x  63  65
t   3.873
sx .51639778

60
 Solution 1-7
 The value of the test statistic t = -
3.873
 It is less than the critical value of t
 It falls in the rejection region
 Therefore, we reject H0

61
Example 1-8
The management at Massachusetts Savings
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.
62
Example 1-8
To check if the new computer system is more
efficient than the old system, the management of
the bank took a random sample of 18 hours and
found that during these hours the mean number
of customers served by tellers was 28 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? Assume that the
number of customers served per hour by a teller
on this computer system has an approximately
normal distribution.

63
 Solution 1-8
 H0: μ = 22
 The new computer system is not more
efficient
 H1: μ > 22
 The new computer system is more
efficient

64
 Solution 1-8
 The sample size is small
 The population is approximately
normally distributed
 The population standard deviation is
not known
 Hence, we use the t distribution to
make the test

65
 Solution 1-8
 α = .01
 The > sign in the alternative
hypothesis indicates that the test is
right-tailed
 Area in the right tail = α = .01
 df = n – 1 = 18 – 1 = 17
 The critical value of t is 2.567
66
Figure 1.14

Do not reject H0 Reject

H0

α = .01

0 2.567 t
Critical value of t

67
 Solution 1-8

s 2.5
sx   .58925565
n 18 From H0

x  28  22
t  10.182
sx .58925565

68
 Solution 1-8

The value of the test statistic t =
10.182

It is greater than the critical value of t
 It falls in the rejection region
 Consequently, we reject H0

69
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

70
 Test Statistic cont.
The value of p used in this formula is
the one used in the null hypothesis.
The value of q is equal to 1 – p.
p̂
The value of z calculated for using
the above formula is also called the
observed value of z.

71
 Example 1-9
In a poll by the National Center for
Women and Aging at Brandeis
University, 51% of the women over 50
said that aging is not as bad as they had
expected (USA TODAY, November 19,
2002). Assume that this result holds true
for the 2002 population of all women
aged 50 and over. In a recent random
sample of 400 women aged 50 and over,
54% said that aging is not as bad as
they had expected. 72
Example 1-9
Using the 1% significance level, can
you conclude that the current
percentage of women aged 50 and
over who think that aging is not as
bad as they had expected is different
from that for 2002?

73
 Solution 1-9
 H0: p = .51
 The current percentage is not different
from that of 2002
 H1: p ≠ .51
 The current percentage is different from
that of 2002

74
 Solution 1-9
 n = 400, and p̂ = .54
 α = .01
 np = 400(.51) = 204
 nq = 400(.49) = 196
 Both np and nq are greater than 5
 The sample size is large
 Consequently, we use the normal
distribution to make a test about p
 The critical values of z are -2.58 and 2.58
75
Figure 1.15
Look for this area in the
normal distribution table
to find the critical values
of z

α /2 = .005 α /2 = .005

.4950 .4950
p = .51 p̂
Reject H0 Do not reject H0 Reject H0

-2.58 0 z
2.58 Two critical values of z 76
 Solution 1-9

pq (.51)(.49)
 pˆ   .02499500
n 400 From H 0

pˆ  p .54  .51
z  1.20
 pˆ .02499500

77
 Solution 1-9
 The value of the test statistic z = 1.20
p̂
for lies in the nonrejection
region
 Consequently, we fail to reject H0

78
Example 1-10
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.
79
 Example 1-10
One such random sample of 200 chips
taken recently from the production
line contained 14 defective chips. Test
at the 5% significance level whether
or not the machine needs an
adjustment.

80
 Solution 1-10
 H0: p ≤ .04
 The machine does not need an
adjustment
 H1: p > .04
 The machine needs an adjustment

81
 Solution 1-10
14
 n = 200, and pˆ  200 .07
 np = 200(.04) = 8
 nq = 200(.96) = 192
 α = .05
 Area in the right tail = α = .05
 The critical value of z is 1.65

82
Figure 1.16

α = .05

.4500

p = .04 p̂
Do not reject H0 Reject H0

0
z
1.65 Critical value of z 83
 Solution 1-10

pq (.04)(.96)
 pˆ   .01385641
n 200 From H 0

pˆ  p .07  .04
z  2.17
 pˆ .01385641

84
 Solution 1-10
 The value of the test statistic z =
2.17
 It is greater than the critical value of z
 It falls in the rejection region
 Therefore, we reject H0

85
 Example 1-11
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.

86
 Solution 1-11
 H0: p ≥ .90
 The company’s claim is true
 H1: p < .90
 The company’s claim is false

87
 Solution 1-11
 α = .025.
 np = 150(.90) = 135
 nq = 150(.10) = 15
 Both np and nq are greater than 5
 The sample size is large
 Consequently, we use the normal
distribution to make the hypothesis test
about p
 The critical value of z is -1.96
88
Figure 1.17

α = .025

.4750

p = .90 p̂
Reject H0 Do not reject H0

-1.96 0 z
Critical value of z 89
 Solution 1-11

pq (.90)(.10)
 pˆ   .02449490
n 150 From H 0

pˆ  p .86  .90
z   1.63
 pˆ .02449490

90
 Solution 1-11
 The value of the test statistic z = -
1.63
 It is greater than the critical value of z
 It falls in the nonrejection region
 Therefore, we fail to reject H0

91