The document discusses hypothesis testing for one sample tests. It defines key concepts like the research hypothesis, statistical hypothesis, null hypothesis and alternative hypothesis. It explains how to set up the hypotheses and determine the critical value to either reject or fail to reject the null hypothesis based on the sample data. Examples are provided to demonstrate one-tailed and two-tailed hypothesis tests to determine if a sample mean or proportion is different than what is hypothesized for the population. The steps of hypothesis testing are outlined along with commonly used critical values.
The document discusses hypothesis testing for one sample tests. It defines key concepts like the research hypothesis, statistical hypothesis, null hypothesis and alternative hypothesis. It explains how to set up the hypotheses and determine the critical value to either reject or fail to reject the null hypothesis based on the sample data. Examples are provided to demonstrate one-tailed and two-tailed hypothesis tests to determine if a sample mean or proportion is different than what is hypothesized for the population. The steps of hypothesis testing are outlined along with commonly used critical values.
The document discusses hypothesis testing for one sample tests. It defines key concepts like the research hypothesis, statistical hypothesis, null hypothesis and alternative hypothesis. It explains how to set up the hypotheses and determine the critical value to either reject or fail to reject the null hypothesis based on the sample data. Examples are provided to demonstrate one-tailed and two-tailed hypothesis tests to determine if a sample mean or proportion is different than what is hypothesized for the population. The steps of hypothesis testing are outlined along with commonly used critical values.
The document discusses hypothesis testing for one sample tests. It defines key concepts like the research hypothesis, statistical hypothesis, null hypothesis and alternative hypothesis. It explains how to set up the hypotheses and determine the critical value to either reject or fail to reject the null hypothesis based on the sample data. Examples are provided to demonstrate one-tailed and two-tailed hypothesis tests to determine if a sample mean or proportion is different than what is hypothesized for the population. The steps of hypothesis testing are outlined along with commonly used critical values.
• Hypothesis testing for mean • Hypothesis testing for proportion The Hypothesis
• Research Hypothesis ▪ a statement of what the researcher believes will be the outcome of an experiment or a study
• Statistical Hypothesis ▪ a formal structure used to statistically (based on a sample) test the research hypothesis • Examples of Research Hypotheses
▪ Older workers are more loyal to a company.
▪ Companies with more than $1 billion of assets spend
a higher percentage of their annual budget on advertising than do companies with less than $1 billion of assets. Statistical Hypotheses • A claim (assumption) about a population parameter • Examples: ▪ The average monthly cell phone bill of the people in Lucknow is Rs. 1000.00 ▪ The proportion of adults in this city with cell phones is more than 0.80 • Statistical Hypothesis has two parts ▪ Null Hypothesis ▪ Alternative Hypothesis The Null Hypothesis • Denoted as H0 • Nothing new is happening • The null condition exists • It refers to the status quo (current or existing state of affairs) • Similar to the notion of innocent until proven guilty • Usually a hypothesis of no difference. • Example: The average number of TV sets in U.S. Homes is equal to three. H0: μ = 3 • Begin with the assumption that the H0 is true • It is tested for rejection or acceptance. The Alternative Hypothesis • Denoted as H1 or Ha • Something new is happening • It is the opposite of the null hypothesis ▪ E.g., The average number of TV sets in U.S. homes is not equal to 3 ( H1: μ ≠ 3 ) • It challenges the status quo • It is generally the hypothesis that the researcher is trying to prove • The Null and Alternative Hypotheses are mutually exclusive. • Only one of them can be true. • Example: • Because of the increased marketing efforts, company officials believe the company’s market share is now greater than 18%, and the officials would like to prove it.
H 0 : 0.18 or H 0 : = 0.18 H1 : 0.18 The Hypothesis Testing • Claim: The population mean age is 50 years. ▪ H0: μ = 50, H1: μ ≠ 50 • Sample the population and find sample mean. Population
Sample • Suppose the sample mean age is 20 years.
• This is significantly lower than the claimed mean
population age 50 years.
• If the claim (H0) is true, the probability of getting
such a different sample mean would be very small.
• Getting a sample mean of 20 is very unlikely.
• So, when we get sample mean as 20, we do not
believe on the claim (H0). • If the sample mean is close to the assumed population mean, H0 is not rejected.
• If the sample mean is far from the assumed
population mean, H0 is rejected.
• How far is “far enough” to reject H0?
• The critical value of the test statistic is used to
decide on this. Critical (Rejection) and Acceptance Region • Critical value divides the whole area under probability curve into two regions: • Critical (Rejection) region ▪ When the statistical outcome falls into this region, H0 is rejected. ▪ Size of this region is α.
• Acceptance Region ▪ When the statistical outcome falls into this region, H0 is accepted. ▪ Size of this region is (1-α). Critical Values
Acceptance Region Distribution of the test statistic (1- a)
Region of Region of Rejection Rejection a/2 a/2
Critical Values
Two Tail Test
Example: H0: μ = 50 Vs H1: μ ≠ 50 a 1- a
0 Upper-tail test or Right Tail Test Example: H0: μ ≤ 50 Vs H1: μ > 50
a 1- a
0 Lower-tail test or Left Tail Test Example: H0: μ ≥ 50 Vs H1: μ < 50 Example: • A survey, done 10 years ago, of CPAs in the U.S. found that their average salary was $74,914. • A sample of 112 CPAs produced a mean salary of $78,695. • Assume that = $14,530. • An accounting researcher would like to test whether over the years ▪ this average has increased? ▪ this average has decreased? ▪ this average has changed? Hypothesis Testing for μ (σ known) Example: • A survey, done 10 years ago, of CPA’s (Certified Public Accountant) in the U.S. found that their average salary was $74,914. • An accounting researcher would like to test whether over the years ▪ this average has increased? • Right or Upper Tail Test (H0: μ ≤ 74914, H1: μ > 74914) ▪ this average has decreased? • Left or Lower Tail Test (H0: μ ≥ 74914, H1: μ < 74914) ▪ this average has changed? • Two Tail Test (H0: μ = 74914, H1: μ ≠ 74914) • A sample of 112 CPAs produced a mean salary of $78,695. • Assume that = $14,530. • Has the average salary of CPAs in the U.S. increased? • Right or Upper Tailed Test • (H0: μ ≤ 74914, H1: μ > 74914) • Test Statistic x - 78695 - 74914 Zc = = = 2.7539 n 14530 112
• At 5% level of significance, critical value for a right
tailed test, z(0.05) =1.645 • Since, computed value > critical value at 5% level of significance • we reject H0 at 5% level of significance in favor of H1 • and conclude that average salary of CPAs in the U.S. has increased. • Has the average salary of CPAs in the U.S. decreased? • Left or Lower Tailed Test • (H0: μ ≥ 74914, H1: μ < 74914) • Test Statistic x - 78695 - 74914 Zc = = = 2.7539 n 14530 112
• At 5% level of significance, critical value for a left tailed
test, z(0.05) = -1.645 • Since, computed value > critical value at 5% level of significance • we accept H0 at 5% level of significance against H1 • and conclude that average salary of CPAs in the U.S. has not decreased. • Has the average salary of CPAs in the U.S. is changed? • Two Tailed Test • (H0: μ = 74914, H1: μ ≠ 74914) • Test Statistic x - 78695 - 74914 Zc = = = 2.7539 n 14530 112
• At 5% level of significance, critical value for a two
tailed test, z(0.025) =1.96 • Since, |computed value| > critical value at 5% level of significance • we reject H0 at 5% level of significance in favor of H1 • and conclude that average salary of CPAs in the U.S. is changed. • Assumptions: ▪ σ is known. ▪ Population is normal or ▪ sample size is large (n ≥ 30). • Test Statistic: ▪ Compute the value of test statistic using following formula: x- Zc = n • Level of Significance: ▪ Fix the value of a, say 0.05 or 0.10 • Critical Values: ▪ Distribution of test statistic is N(0,1) ▪ Critical values are obtained using N(0,1) • For two tail test (H0: μ = μ0, H1: μ ≠ μ0): zα/2 N(0,1)
-1.645 • Decision Making • We reject H0 in the favor of H1 at α x100% level • If |Zc| > zα/2 (for two tailed test) • If Zc > zα (for right tailed test) • If Zc < -zα (for left tailed test)
• Accepting H0 means that
▪ The difference between sample mean and hypothetical population mean is not significant. ▪ This difference is because of sampling fluctuation only. • Steps: • State H0 and H1 • Compute the value of test statistic Zc • Obtain critical value for fixed α and according to H1 (Right/ Left/ Two tailed test) • Compare computed value of Zc with critical value • Make the decision accordingly. • Some useful critical values of N(0,1) distribution Level of Significance Test 1% 5% 10% Two Tailed 2.58 1.96 1.645 Right Tailed 2.33 1.645 1.28 Left Tailed -2.33 -1.645 -1.28 • Example: • The mean tariff of a hotel room in New York is said to be $168 per night. • A random sample of 25 hotels resulted in mean tariff $172.50 with standard deviation $15.40. • Test at the a = 0.05 level: • if the mean tariff of a hotel room in New York ismore than $168 per night; • if the mean tariff of a hotel room in New York is not $168 per night. • A stem-and-leaf display and a normal probability plot indicate the data are approximately normally distributed. • Computed Value of Test Statistic = 1.461039 • Example: • The mean tariff of a hotel room in New York is said to be $168 per night. • A random sample of 25 hotels resulted in mean tariff $172.50 with standard deviation $15.40. • Test at the a = 0.05 level: • if the mean tariff of a hotel room in New York ismore than $168 per night; • if the mean tariff of a hotel room in New York is not $168 per night. • A stem-and-leaf display and a normal probability plot indicate the data are approximately normally distributed. • Computed Value of Test Statistic = 1.461039 • 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. • Suppose a sample is taken with the following results • Sample size = 64, sample mean = $53.1 per month • Past company records indicate that the standard deviation is about $10. • To Test • H0: μ ≤ 52 Against H1: μ > 52 • Test Statistic: Zc = x- μ = 53.1 - 52 = 0.88 σ 10 n 64 P(Z Z c ) = P(Z 0.88 ) = 1 - 0.8106 = 0.1894 p-value = 0.1894 Zc = 0.88 Reject H0 a = 0.10
0 Do not reject H0 1.28 Reject H0
Do not reject H0 since p-value = 0.1894 > a = 0.10
p – value Approach • Let Zc be the computed value of test statistic • Let Z ~ N(o,1) • Then p – value is given by the following probability ▪ For two tailed tests: • 2P(Z> |Zc|) ▪ For right tailed tests: • P(Z> Zc) ▪ For left tailed tests: • P(Z< Zc) • Decision: H0 is rejected in the favor of H1 at α x100% level of significance, if • p – value < α • The p – value is the smallest level of significance at which H0 would be rejected. • Consider the example of average salary of CPAs in the U.S. • computed value of test statistic, Zc = 2.7539 ▪ For two tailed tests (H0: μ = 74914, H1: μ ≠ 74914): • p = 2P(Z > 2.7539) = 0.005888 (using N(0,1)) • H0 is rejected for all α ≥ 0.005888 ▪ For right tailed tests (H0: μ ≤ 74914, H1: μ > 74914): • p = P(Z > 2.7539) = 0.002944 • H0 is rejected for all α ≥ 0.002944 ▪ For left tailed tests (H0: μ ≥ 74914, H1: μ < 74914): • p = P(Z < 2.7539) = 0.997056 • H0 is rejected for all α ≥ 0.997056 • We can not have this much high value of α • So, we accept H0 Hypothesis Testing for μ (σ unknown) • Assumptions: ▪ σ is unknown. ▪ Population is normal or ▪ sample size is small (n < 30). • Test Statistic: x-μ Tc = s1 n
• Test statistic Tc has t(n-1) distribution.
• Critical values of t(n-1) distribution can be obtained from the t table for given d.f. and significance level. • For right tail test (H0: μ ≤ μ0, H1: μ > μ0): tα • P( T < tα) = 1- α T~t(n-1) Rejection Region (α) • P(T > tα ) = α Acceptance Region (1- α)
tα
• For left tail test (H0: μ ≥ μ0, H1: μ < μ0): -tα • P( T > -tα) = 1- α Rejection T~t(n-1) Region (α) • P(T < -tα ) = α Acceptance Region (1- α)
-tα • For two tail test (H0: μ = μ0, H1: μ ≠ μ0): tα/2 T~t(n-1)
Rejection Rejection Region (α/2) Acceptance Region (α/2) Region (1- α)
- tα/2 tα/2 • P(- tα/2 < T< tα/2 ) = 1- α • P(T > tα/2 ) = α/2 P( T < -tα/2 ) = α/2 • We reject H0 in the favor of H1 at α x100% level • If |Tc| > tα/2 (for two tailed test) • If Tc > tα (for right tailed test) • If Tc < -tα (for left tailed test) • Example: • A sample of 25 people is taken. • The length of time to prepare dinner is recorded in minutes, as given below: • 44.0 51.9 49.7 40.0 55.5 33.0 43.4 41.3 45.2 40.7 41.1 49.1 30.9 45.2 55.3 52.1 55.1 38.8 43.1 39.2 58.6 49.8 43.2 47.9 46.6 • Is there any evidence that the population mean time to prepare dinner is greater than 40 minutes? • Use a level of significance of 0.05. • The data is approximately normally distributed • Computed value of Test Statistic = 4.04388267 • Example: • An engineer has developed a new, energy-efficient lawn mower engine. • He claims that the engine will run continuously for an average of 300 minutes on a single gallon of regular gasoline. • Suppose a simple random sample of 50 engines is tested. • The engines run for an average of 295 minutes, with a standard deviation of 20 minutes. • Test the null hypothesis that the mean run time is 300 minutes against the alternative hypothesis that the mean run time is not 300 minutes. • Use a 0.05 level of significance. • Computed Value of Test Statistic = -1.76777 • p – value Approach in t Distribution: • Let tc be the computed value of test statistic • Let T ~ t(n-1) • Then p – value is given by the following probability ▪ For two tailed tests: • 2P(T > |tc|) ▪ For right tailed tests: • P(T > tc) ▪ For left tailed tests: • P(T < tc) • Decision: H0 is rejected in the favor of H1 at α x100% level of significance, if • p – value < α • In case of t distribution, p – value may not always be obtained from the table. (Use Excel) Hypothesis Testing of Population Proportion π • Example: • A manufacturer believes that exactly 8% of its products contain at least one minor flaw. • The company wants to test this belief. • A sample of 200 products resulted in 33 items have at least one minor flaw. • Population is divided into 2 mutually exclusive and exhaustive classes “A” and “Ac” • π = Actual proportion of individuals in class “A” • A sample is selected from this population • p= sample proportion of individuals in class “A” • We want to test: ▪ H0: P ≤ P0, H1: P > P0 (Right or Upper Tail Test) ▪ H0: P ≥ P0, H1: P < P0 (Left or Lower Tail Test) ▪ H0: P = P0, H1: P ≠ P0 (Two Upper Tail Test) • Test Statistic p-P Zc = PQ n • Assumption: Sample is large. • n ≥ 30 or nP ≥ 5 as well as nPQ ≥ 5 • Zc ~ N(0,1) • So, N(0,1) distribution is used to obtain critical value. • Decision rules are the same as discussed earlier. • p – value approach can also be used. • 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 a = 0.05 significance level. • H0: π = 0.08 H1: π ≠ 0.08 Reject H0 Reject H0 • π = 0.08, 1- π = 0.92 • n = 500, p = 0.06 0.025 Accept H0 0.025
• α = 0.05, z 0 • Critical Value = ± 1.96 -1.96 1.96
• Computed Test Statistic = -1.6485
• Accept H0 at α = 0.05 • Example: • A political group ABC Party claims that the proportion of voters who support it is more than 0.4. • A news channel conduct a survey to test this claim. • A sample of 200 people is selected. • Out of them only 65 are the supporters of ABC Party. • Can you help the news channel in the analysis. • Computed value of Test Statistic = -2.1651 • p – value = ? • Example: • A manufacturer believes exactly 8% of its products contain at least one minor flaw. • The company wants to test this belief. • A sample of 200 products resulted in 33 items have at least one minor flaw. • Use a probability of a Type I error of 0.10. • Help the company officials. • Computed value of Test Statistic = 4.4309 • p – value = ?
