BUS 173

Chapter 10: Inference about the difference between two population means: 1 and 2
known and unknown
1 and 2 known
1 and 1 are population characteristics of a population1.
2 and 2 are population characteristics of a population2.
Difference between two population means = 1 - 2
x1- bar = sample mean from a sample on population1
x2 - bar = sample mean from a sample on population2
The point estimator of the difference between the two population means is the difference
between the two sample means. x1-bar x2 bar
Standard Error of x1-bar x2-bar, x1-bar x2-bar = (12/n1+ 22/n2)
If both populations have a normal distribution and if the sample sizes are large enough,
then the central limit theory allows us to approximate the difference between the using
a normal distribution.
The Margin of Error = Z/2 x1-bar x2-bar
= Z/2 (12/n1+ 22/n2)
Where 1- is the confidence coefficient
Given this margin of error, internal estimate of the difference between the two
population means, x1-bar x2 bar Z/2 (12/n1+ 22/n2)
Where 1- is the confidence coefficient
Hypothesis test about 1-2:
There can be three forms of hypothesis tests:
H0 : 1-2 D0
Ha : 1-2 < D0
H0 : 1-2 D0
Ha : 1-2 < D0
H0 : 1-2 = D0
Ha : 1-2 D0

In many application of hypothesis tests involving difference D0 = 0. For example, in a

two tailed test involving D0 = 0, the null hypothesis is 1=2, rejection of this would lead
to 1 and 2 are not equal.
Test statistic for 1-2 hypothesis test, 1 and 2 known
Z = ((x1-bar x2 bar) D0)/ (12/n1+ 22/n2)
Interference about the difference between two population means: 1 and 2
unknown
When the values of the population standard deviation are not known, we use the tdistribution score instead of the standard normal distribution Z score.
Internal estimate for 1 and 2 unknown case is, x1-bar x2 bar t/2 (12/n1+ 22/n2)
Where 1- is the confidence coefficient
The problem that we face here is with finding the appropriate degrees of freedom in
calculating the t static,
df = (s12/n1 + s22/n2)2 / ((1/(n1-1)(s12/n1)2 + (1/(n2-1)(s22/n2)2)
Test static for 1 and 2 unknown case,
t = ((x1-bar x2 bar) D0) / (s12/n1+ s22/n2)
Where degrees of freedom is to be found using the above mentioned formula
Interference about the difference between two population means: Matched Samples
When we use the same sample assess the difference between two things, we need to use
the matched sample method. On a matched sample we use the difference data for the test
statistic, d-bar = di / n
Sd = ( (d1- d-bar)2 / (n-1))
Test static for matched samples, t = (d-bar - d) / (Sd/n)
Where the degrees of freedom = n-1
Interference about the difference between two population proportions
When considering the differences between two population proportions p1 and p2, we
consider the following test statistics:
p1 p2 point estimator = p1-bar p2-bar

Standard Error of p1-bar p2-bar

p1-bar p2-bar = ((p1(1-p1)/n1) + (p2(1-p2)/n2)
for Margin of Error we cannot use Z/2 or p1-bar p2-bar because p1 and p2 are unknown using
the sample proportion p1-bar to estimate p1 and sample proportion p2-bar to estimate p2,
the margin of error is as follows:
M.E. = Z/2 ((p1-bar(1-p1-bar)/n1) + (p2-bar(1-p2-bar)/n2)
Internal Estimate would be
p1-bar p2-bar Z/2 ((p1-bar(1-p1-bar)/n1) + (p2-bar(1-p2-bar)/n2)
Where 1- is the confidence coefficient
Standard Error of p1-bar p2-bar when p1= p2 = p
p1-bar p2-bar = ((p(1-p)/n1) + (p(1-p)/n2)
= (p(1-p)(1/n1+1/n2))
With p unknown, pooled estimator of p when p1= p2 = p
p-bar = (n1 p1-bar + n2 p2-bar) / (n1+n2)
Pooled estimator of p is the weighted average of p1-bar and p2-bar
Test statistics for tests about p1 p2
Z = (p1-bar p2-bar) / (p-bar(1 - p-bar) (1/n1+1/n2))