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Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Test 2 Review

Betsy Greenberg

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

1

Prepare for Test 2

2

Sampling Distributions

3

Confidence Intervals

4

Hypothesis Tests

5

Using StatTools

Betsy Greenberg
Elementary Business Statistics – Inference Review

Confidence Intervals

Hypothesis Tests

Using StatTools

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Prepare for Test #2

Use ”What have we learned?”
Understand all terms

Solve extra problems
Text has many exercises
Solve as many as you have time for

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Prepare for Test #1

Try the sample test
Make TWO pages of notes (both sides)
Include definitions, formulas, Excel and StatTools instructions,
z∗ values, etc.
Anything you want
Put your name on your sheet of notes. It will be collected
when you have completed the test.

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

What to bring

ID
2 pages of notes (both sides)
Pencils
Blank paper will be provided

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Where is the test?

Test is in the MOD Lab - CBA 5.304/5.325
Login with your McCombs password
Lab computers use Office 2014
Data Analysis and StatTools are available

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

What’s included in the Test?

All of Chapter 9
Chapter 10 except for 10.7
All of Chapter 11
Chapter 12 except for 12.5 and 12.6

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Sampling Distribution of pˆ

The mean of the samplingq
distribution is p
The standard deviation is p(1−p)
n
Since p is unknown,
we use the standard error instead which is
Betsy Greenberg
Elementary Business Statistics – Inference Review

q

p(1−
ˆ
p)
ˆ
n
McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Sampling Distribution of y¯
If yi has mean µ and standard
deviation
σ,
P y1 +···+y
n
y¯ =
has mean µ
n
If the yi s are independent,
the standard deviation = √σn
Since σ is typically unknown,
it will be estimated with the
sample standard deviation, s
The standard error is
Betsy Greenberg
Elementary Business Statistics – Inference Review

√s
n
McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Statistical Inference

Methods for drawing conclusions about a population from
sample data are called statistical inference
Methods
1

Confidence Intervals – estimating a value of a population
parameter

2

Tests of significance – assess evidence for a claim about a
population

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Checklist for Inference
Independence:
The sampled values must be independent of each other.
Randomization:
The sample is a simple random sample from the relevant
population.
10% condition:
Sample size is less than 10% of the population size.
Sample size condition:
Success\failure condition for proportions
Nearly normal condition for means

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Specific sample size conditions:
Confidence Interval for proportion:
Both npˆ and n(1 − p)
ˆ are at least 10.
Hypothesis test for proportion:
Both np0 and n(1 − p0 ) are at least 10.
CI and Tests for means:
n is greater than both 10(skewness)2 and 10|kurtosis|

Use Excel function SKEW and KURT
Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Confidence Intervals

A confidence interval has the form:

Estimate ± Margin of Error

Estimate ± (z ∗ or t ∗ ) × Standard Error (SE)

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Confidence Intervals
The confidence level C , shows how confident we are that the
procedure will catch the true population parameter.
The procedures give confidence intervals that C% of the time
will include the true population parameter
Type of Problems
Proportions
Mean
Matched pairs
Two (independent) samples

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Confidence Intervals for: Population Proportion, p

= Number of successes
number of trials
q
ˆ
p)
ˆ
Standard Error: SE = p(1−
n
Estimate: pˆ =

X
n

Critical Value: z ∗
Margin of Error:

z ∗ SE

Betsy Greenberg
Elementary Business Statistics – Inference Review

=

z∗

q

p(1−
ˆ
p)
ˆ
n

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Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Finding ±z ∗ for 95% confidence

NORM.INV(0.025, 0, 1)

Betsy Greenberg
Elementary Business Statistics – Inference Review

and

NORM.INV(0.975,0,1)

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Confidence Intervals

Hypothesis Tests

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Finding ±z ∗ for 99% confidence

NORM.INV(0.005, 0, 1)

Betsy Greenberg
Elementary Business Statistics – Inference Review

and

NORM.INV(0.995,0,1)

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Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Confidence Intervals for: One Population Mean
Estimate: y¯ (Excel fn: AVERAGE)
Standard Error: SE = √sn
qP
(x−¯
y )2
where s =
(Excel fn: STDEV.S)
n−1
Degrees of freedom: k = n − 1
Critical Value: t ∗ for a distribution t(k)
Margin of Error: t ∗ SE = t ∗

Betsy Greenberg
Elementary Business Statistics – Inference Review

√s
n

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Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Comparing Two Groups
Pared Data
Confidence interval for µdifference :
Calculate the differences and then treat as one sample:
s
y¯ ± t ∗ √
n
Two Independent Samples
Confidence interval for µ1 − µ2 :
s

y1 − y¯2 ) ± t ∗

Betsy Greenberg
Elementary Business Statistics – Inference Review

s12
s2
+ 2
n1 n2

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Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Finding ±t ∗ for 95% confidence and df = n - 1

T.INV(0.025, df)

Betsy Greenberg
Elementary Business Statistics – Inference Review

and

T.INV(0.975, df)

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Finding ±t ∗ for 99% confidence and df = n - 1

T.INV(0.005, df)

Betsy Greenberg
Elementary Business Statistics – Inference Review

and

T.INV(0.995, df)

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

What does 95% Confidence Mean?
We are 95% confident that the true value lies in our interval
We are using a procedure that gives an interval that includes
the true value 95% of the time. 5% of the time that we use
this procedure, we will get unlucky and the true value will be
outside of the interval.
The true value is probably inside of the interval.

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Hypothesis Tests
Hypotheses State claims, H0 and Ha , about a population in terms
of the population parameter
Model Are the Independence, Randomness, 10% Condition,
and Sample Size Conditions satisfied?
Mechanics Calculate the test statistic and P-value
pˆ − p0
z=q

p0 (1−p0 )
n

t=

y¯ − µ0
√s
n

t=


y1 − y¯2 ) − 0
q 2
s1
s22
+
n1
n2

Conclusion Compare the P-value and the significance level, α
If the P-value ≤ α, reject H0 . Say the results are
statistically significant.
Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Hypothesis Tests
Hypotheses State claims, H0 and Ha , about a population in terms
of the population parameter
Model Are the Independence, Randomness, 10% Condition,
and Sample Size Conditions satisfied?
Mechanics Calculate the test statistic and P-value
value from data − value from H0
SE
Conclusion Compare the P-value and the significance level, α
If the P-value ≤ α, reject H0 . Say the results are
statistically significant.
Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Two Types of Errors

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Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

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Confidence Intervals

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Error probabilities

α = P(Type I error)
= P(reject H0 when H0 is true)
= significance level
β = P(Type II error)
= P(fail to reject H0 when H0 is false)
depends on the true value of p
Power = 1 − β

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

P-value for Proportions

One-tailed tests
HA : p > p0
=1-NORM.DIST( p,
ˆ p0 ,

q

p0 (1−p0 )
n

, 1)

HA : p < p0
=NORM.DIST(p,
ˆ p0 ,

q

p0 (1−p0 )
n

, 1)

Two-tailed test
HA : p 6= p0
Double one of the above
Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

P-value for Means
One-tailed tests
HA : µ > µ0
Use =T.DIST.RT(t,deg freedom)

HA : µ < µ0
Use =T.DIST(t,deg freedom,1)

Two-tailed test
HA : µ 6= µ0
Use =T.DIST.2T(ABS(t),deg freedom)
Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

StatTools > Statistical Inference
First use the Data Set Manager

Select Confidence Interval or Hypothesis Test

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

StatTools > Statistical Inference

Next select Proportion or Mean/Std Deviation
Then fill out the dialog box

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Confidence Interval for one Proportion:
Make a table with counts or proportions for success and failure
Table must have column titles. Use the Data Set Manager
StatTools > Statistical Inference > Confidence Interval >
Proportion
Select One-Sample Analysis and Summary Table with Counts
or Proportions (depending on your data)
Select your level of confidence. If your summary data is
proportions, enter the sample size.

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Hypothesis Test for one Proportion:
Make a table with counts or proportions for success and failure
Table must have column titles. Use the Data Set Manager
StatTools > Statistical Inference > Hypothesis Test >
Proportion
Select One-Sample Analysis and Summary Table with Counts
or Proportions (depending on your data)
Select the null and alternative hypothesis
If your summary data is proportions, enter the sample size.
Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Confidence Interval for one Mean:

StatTools > Statistical Inference > Confidence Interval >
Mean/Std. Deviation
Select One-Sample Analysis and check For the Mean

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Hypothesis Test for one Mean:

StatTools > Statistical Inference > Hypothesis Test >
Mean/Std. Deviation
Select One-Sample Analysis and check For the Mean
Select the null and alternative hypothesis

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Hypothesis Test for Matched Pairs

StatTools > Statistical Inference > Hypothesis Test >
Mean/Std. Deviation
Select Paired Sample Analysis and check For the Mean
Select the null and alternative hypothesis

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Confidence Interval for Matched Pairs

StatTools > Statistical Inference > Confidence Interval >
Mean/Std. Deviation
Select Paired Sample Analysis and check For the Mean

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Hypothesis Test for Two Independent Samples

StatTools > Statistical Inference > Hypothesis Test >
Mean/Std. Deviation
Select Two-Sample Analysis and check For the Mean
Select the null and alternative hypothesis

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Confidence Interval for Two Independent Samples

StatTools > Statistical Inference > Confidence Interval >
Mean/Std. Deviation
Select Two-Sample Analysis and check For the Mean

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Sample Size Calculations

StatTools > Statistical Inference > Sample Size Selection
Select Mean or Proportion as needed
Half-Length of Interval is the desired margin of error

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs

Prepare for Test 2

Sampling Distributions

Confidence Intervals

Hypothesis Tests

Using StatTools

Using StatTools with only Summary Data

Proportions
Make a table with your data giving categories and either
counts or proportions
Change data format to Summary Table with Counts or
Summary Table with Proportions
Means
Make fake data and use the appropriate StatTools procedure
Correct the results by changing the sample size, mean, and
standard deviation

Betsy Greenberg
Elementary Business Statistics – Inference Review

McCombs