1-sample hypo test

Chapter 10

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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 cars on our PLUS highway is 100kmh
 The mean cost to remodel a kitchen is $20,000
 The average score of the students in Jan’s class is 53.
 The average starting salary of fresh graduates is RM1,276.

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Hypothesis Testing
 The objective of a hypo test 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,

LEVEL OF SIGNIFICANCE The probability of rejecting the null

hypothesis when it is true.

 Can be any value between 0 and 1

 Traditionally: 1%, 5%, 10%
 Default: 5%

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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,

TYPE II ERROR Not rejecting the null hypothesis when it is false.
 Type II error is designated with the Greek letter beta,

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Possible Error in Hypothesis Testing
TYPE I ERROR Rejecting the null hypothesis, H0, when it is true.

TYPE II ERROR Not rejecting the null hypothesis when it is false.

 https://youtu.be/a_l991xUAOU (a clip on Type I & II

errors); read page 278 to know more about these errors.

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Step 3 of the Process
 Then, select the test statistic (can be a zs or a ts)
TEST STATISTIC A value, determined from sample information, used
to determine whether to reject the null hypothesis.

 Inhypothesis testing for the mean, , when is known, the test

statistic z is computed with the following formula

 We can determine whether the distance between and is

statistically significant by finding the number of standard
deviations is from
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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 z-statistic follows the
normal distribution
 Here, an 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
 Critical value can be zc or tc

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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
 Decision: Reject H0 if test statistic > critical value

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Steps 5 & 6 of the Six-Step Process
 Step 6 Interpret the results
 What can we say or report based on the results of the
statistical test?
 What is the meaning of your results?

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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 with an with an
Left-tailed test Two-tailed test Right-tailed test

Note that the total area in the normal distribution is 1.00.

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H0: = $65,000 per year
H1: ≠ $65,000 per year
with an
Two-tailed test (remember to divide by 2)

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H0: ≥ 60,000 miles
H1: < 60,000 miles
with an
Left-tailed test

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H0: ≤ 453 grams
H1: > 453 grams
with an
Right-tailed test

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 2-tailed

Pop SD known 1-tailed (right)

1-tailed (left)
1-sample
hypo test
2-tailed

Pop SD
1-tailed (right)
unknown

1-tailed (left)

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2-Tailed Test, pop known
Jamestown Steel Company produces office desks. From its records, the weekly
production of the 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 desks. Is the average number of desks
produced different from 200 at the .01 significance level?

Step 1: State the null hypothesis and alternate hypothesis.

H0: = 200 desks
H1: ≠ 200 desks
Step 2: Select the level of significance. Here = .01 = 1%
Step 3: Select the test statistic. Use z since the pop SD is known.

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Z-statistic (zs)

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2-Tailed Test, pop known
Step 4: Formulate the decision rule by first determining the critical values of z, or
also known as the critical z-values (zc).

Decision Rule: If the computed value of z is not between -2.576 and 2.576, reject
the null hypothesis. If z falls between -2.576 and 2.576, do not reject the null
hypothesis.

Compare the z-statistic zs with the critical z-value zc

zs : you calculate from the formula

zc : you read from the table

Reject H0 if |zs| > |zc|

(that is, if the zs falls in the rejection region)

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2-Tailed Test, pop known

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2-Tailed Test, pop known
Step 5: Take sample, compute the test statistic (the zs), 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.
= = 1.547

Decision: Because 1.547 does not fall in the rejection region, so we do not reject H0.

Step 6: Interpret the result.

∵ zs < z c
Do not reject H0
There is no statistical evidence to suggest that the sample mean (203.5) is significantly
different from the pop mean (200). No proof to say that desk production has changed
from 200 to 203.5.

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1-Tailed Test, pop known
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 .

Before: Now:
A two-tailed test A one-tailed test (right)
H0: = 200 desks H0: ≤ 200 desks
H1: ≠ 200 desks H1: > 200 desks

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1-Tailed Test, pop known

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Hypothesis Testing, 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: ≥ $60
H1: < $60
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Hypothesis Testing, Unknown Example
Step 2: Select the level of significance; we will use .01

Step 3: Select the test statistic; we will use t distribution (because pop is unknown)

Step 4: Formulate the decision rule; reject H0 if t is less than -2.485

Reject H0 if |ts| > |tc|

Step 5: Take sample, make decision; Do not reject H0 because ts=1.82 < tc=2.458

Step 6: Interpret the result.

∵ t s < tc
Do not reject H0
There is no statistical evidence to suggest that the sample mean (56.42) is significantly
less than the pop mean (60). No proof to say that the cost-cutting measures have been
effective.

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Hypothesis Testing, Unknown Example

t-statistic, ts = = = -1.82

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Hypothesis Testing, Unknown Example

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Your turn:
 Try this example. Try to get the answer first, then only
refer to page 293-294 to cross-check your answer.

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