Inference About Means and

Proportions with
Two Populations
 Inferences About the Difference Between
Two Population Means: s 1 and s 2 Known
 Inferences About the Difference Between
Two Population Means: s 1 and s 2 Unknown
 Inferences About the Difference Between
Two Population Means: Matched Samples
 Inferences About the Difference Between
Two Population Means: s 1 and s 2 Known
 Interval Estimation of m 1 – m 2
 Hypothesis Tests About m 1 – m 2
 Estimating the Difference Between
Two Population Means
 Let m1 equal the mean of population 1 and m2 equal
the mean of population 2.
 The difference between the two population means is
m1 - m2.
 To estimate m1 - m2, we will select a simple random
sample of size n1 from population 1 and a simple
random sample of size n2 from population 2.
 Let x1 equal the mean of sample 1 and x2 equal the
mean of sample 2.
 The point estimator of the difference between the
means of the populations 1 and 2 is x1  x2.
 Sampling Distribution of x1  x2

 Expected Value
E ( x1  x2 )  m1  m 2

 Standard Deviation (Standard Error)

s12 s 22
s x1  x2  
n1 n2

where: s1 = standard deviation of population 1

s2 = standard deviation of population 2
n1 = sample size from population 1
n2 = sample size from population 2
 Interval Estimation of m1 - m2:
s 1 and s 2 Known
 Interval Estimate

s 12 s 22
x1  x2  z / 2 
n1 n2
where:
1 -  is the confidence coefficient
 Interval Estimation of m1 - m2:
s 1 and s 2 Known
 Example: Par, Inc.
Par, Inc. is a manufacturer of golf equipment and
has developed a new golf ball that has been
designed to provide “extra distance.”
In a test of driving distance using a mechanical
driving device, a sample of Par golf balls was
compared with a sample of golf balls made by Rap,
Ltd., a competitor. The sample statistics appear on
the next slide.
 Interval Estimation of m1 - m2:
s 1 and s 2 Known
 Example: Par, Inc.

Sample #1 Sample #2
Par, Inc. Rap, Ltd.
Sample Size 120 balls 80 balls
Sample Mean 295 yards 278 yards

Based on data from previous driving distance

tests, the two population standard deviations are
known with s 1 = 15 yards and s 2 = 20 yards.
 Interval Estimation of m1 - m2:
s 1 and s 2 Known
 Example: Par, Inc.
Let us develop a 95% confidence interval estimate
of the difference between the mean driving distances of
the two brands of golf ball.
 Estimating the Difference Between
Two Population Means

Population 1 Population 2
Par, Inc. Golf Balls Rap, Ltd. Golf Balls
m1 = mean driving m2 = mean driving
distance of Par distance of Rap
golf balls golf balls
m1 – m2 = difference between
the mean distances
Simple random sample Simple random sample
of n1 Par golf balls of n2 Rap golf balls
x1 = sample mean distance x2 = sample mean distance
for the Par golf balls for the Rap golf balls
x1 - x2 = Point Estimate of m1 – m2
 Point Estimate of m1 - m2

Point estimate of m1  m2 = x1  x2
= 295  278
= 17 yards

where:
m1 = mean distance for the population
of Par, Inc. golf balls
m2 = mean distance for the population
of Rap, Ltd. golf balls
 Interval Estimation of m1 - m2:
s 1 and s 2 Known

s12 s 22 (15) 2 ( 20) 2

x1  x2  z / 2   17  1. 96 
n1 n2 120 80
17 + 5.14 or 11.86 yards to 22.14 yards
We are 95% confident that the difference between
the mean driving distances of Par, Inc. balls and Rap,
Ltd. balls is 11.86 to 22.14 yards.
 Hypothesis Tests About m 1  m 2:
s 1 and s 2 Known
 Hypotheses

H 0 : m1  m2  D0 H 0 : m1  m2  D0 H 0 : m1  m2  D0
H a : m1  m 2  D0 H a : m1  m2  D0 H a : m1  m2  D0
Left-tailed Right-tailed Two-tailed
 Test Statistic

( x1  x2 )  D0
z
s 12 s 22

n1 n2
 Hypothesis Tests About m 1  m 2:
s 1 and s 2 Known
 Example: Par, Inc.
Can we conclude, using  = .01, that the
mean driving distance of Par, Inc. golf balls is
greater than the mean driving distance of Rap, Ltd.
golf balls?
 Hypothesis Tests About m 1  m 2:
s 1 and s 2 Known
 p –Value and Critical Value Approaches

1. Develop the hypotheses. H0: m1 - m2 < 0 

Ha: m1 - m2 > 0
where:
m1 = mean distance for the population
of Par, Inc. golf balls
m2 = mean distance for the population
of Rap, Ltd. golf balls

2. Specify the level of significance.  = .01

 Hypothesis Tests About m 1  m 2:
s 1 and s 2 Known
 p –Value and Critical Value Approaches

3. Compute the value of the test statistic.

( x1  x2 )  D0
z
s 12 s 22

n1 n2
(295  278)  0 17
z   6.49
(15) 2 (20 ) 2 2.62

120 80
 Hypothesis Tests About m 1  m 2:
s 1 and s 2 Known
 p –Value Approach

4. Compute the p–value.

For z = 6.49, the p –value < .0001.

5. Determine whether to reject H0.

Because p–value <  = .01, we reject H0.
At the .01 level of significance, the sample evidence
indicates the mean driving distance of Par, Inc. golf
balls is greater than the mean driving distance of Rap,
Ltd. golf balls.
 Hypothesis Tests About m 1  m 2:
s 1 and s 2 Known
 Critical Value Approach

4. Determine the critical value and rejection rule.

For  = .01, z.01 = 2.33

Reject H0 if z > 2.33

5. Determine whether to reject H0.

Because z = 6.49 > 2.33, we reject H0.
The sample evidence indicates the mean driving
distance of Par, Inc. golf balls is greater than the mean
driving distance of Rap, Ltd. golf balls.
 Inferences About the Difference Between
Two Population Means: s 1 and s 2 Unknown
 Interval Estimation of m 1 – m 2
 Hypothesis Tests About m 1 – m 2

A Basic Question:
If standard deviations for two populations are
not known what will be the possibilities about
two standard deviations?

s1 = s2 or s1 ≠ s2
 Interval Estimation of m1 - m2:
s 1 and s 2 Unknown and s 1 ≠ s 2
When s 1 and s 2 are unknown, we will:
• use the sample standard deviations s1 and s2
as estimates of s 1 and s 2 , and
• replace z/2 with t/2.
 Interval Estimation of m1 - m2:
s 1 and s 2 Unknown and s 1 ≠ s 2
 Interval Estimate with t-test statistics

s12 s22
x1  x2  t / 2 
n1 n2
Where the degrees of freedom for t/2 are:
2
2 2
s s 
1 2
  
 n1 n2 
df  2 2
2 2
1  s1  1  s2 
    
n1  1  n1  n2  1  n2 
 Interval Estimation of m1 - m2:
s 1 and s 2 Unknown and s 1 = s 2

Degrees of
freedom
t- statistics value
t- statistics value
 But how to decide which case is applicable?
STEPS

 F-test for equal variances where the hypotheses will

be tested whether two population variances are equal
or not equal.
 On the basis of above we will decide which t-test
 Then apply the required t-test to conclude the
original hypotheses testing.
 Interpret your result.
 Direct and Broker-Purchased Mutual Funds

Millions of investors buy mutual funds choosing from

thousands of possibilities. Some funds can be purchased
directly from banks or other financial institutions whereas
others must be purchased through brokers, who charge a fee
for this service. This raises the question, Can investors do
better by buying mutual funds directly than by purchasing
mutual funds through brokers? To help answer this question,
a group of researchers randomly sampled the annual returns
from mutual funds that can be acquired directly and mutual
funds that are bought through brokers and recorded the net
annual returns, which are the returns on investment after
deducting all relevant fees. These are listed next.
Can we conclude at the 5% significance level that directly
purchased mutual funds outperform mutual funds bought
through brokers?
 Data

Spreadsheet
 Difference Between Two Population Means:
s 1 and s 2 Unknown
 Example: Specific Motors
Specific Motors of Detroit has developed a new
Automobile known as the M car. 24 M cars and 28 J
cars (from Japan) were road tested to compare miles-
per-gallon (mpg) performance. The sample statistics
are shown on the next slide.
 Difference Between Two Population Means:
s 1 and s 2 Unknown
 Example: Specific Motors

Sample #1 Sample #2
M Cars J Cars
24 cars 28 cars Sample Size
29.8 mpg 27.3 mpg Sample Mean
2.56 mpg 1.81 mpg Sample Std. Dev.
 Difference Between Two Population Means:
s 1 and s 2 Unknown
 Example: Specific Motors
Let us develop a 90% confidence interval estimate
of the difference between the mpg performances of
the two models of automobile.
 Point Estimate of m 1  m 2

Point estimate of m1  m2 = x1  x2
= 29.8 - 27.3
= 2.5 mpg

where:
m1 = mean miles-per-gallon for the
population of M cars
m2 = mean miles-per-gallon for the
population of J cars
 Interval Estimation of m 1  m 2:
s 1 and s 2 Unknown
The degrees of freedom for t/2 are:
2 2 2
 (2.56) (1.81) 
  
 24 28 
df  2 2
 24.07  24
1  (2.56) 2  1  (1.81) 2 
    
24  1  24  28  1  28 

With /2 = .05 and df = 24, t/2 = 1.711

 Interval Estimation of m 1  m 2:
s 1 and s 2 Unknown

s12 s22 (2.56)2 (1.81) 2

x1  x2  t / 2   29.8  27.3  1.711 
n1 n2 24 28
2.5 + 1.069 or 1.431 to 3.569 mpg

We are 90% confident that the difference between

the miles-per-gallon performances of M cars and J cars
is 1.431 to 3.569 mpg.
 Hypothesis Tests About m 1  m 2:
s 1 and s 2 Unknown
 Hypotheses

H 0 : m1  m2  D0 H 0 : m1  m2  D0 H 0 : m1  m2  D0
H a : m1  m2  D0 H a : m1  m2  D0 H a : m1  m2  D0
Left-tailed Right-tailed Two-tailed
 Test Statistic

( x1  x2 )  D0
t
s12 s22

n1 n2
 Hypothesis Tests About m 1  m 2:
s 1 and s 2 Unknown
 Example: Specific Motors
Can we conclude, using a .05 level of significance,
that the miles-per-gallon (mpg) performance of M cars
is greater than the miles-per-gallon performance of J
cars?
 Hypothesis Tests About m 1  m 2:
s 1 and s 2 Unknown
 p –Value and Critical Value Approaches
1. Develop the hypotheses.
H0: m1 - m2 < 0 
Ha: m1 - m2 > 0
where:
m1 = mean mpg for the population of M cars
m2 = mean mpg for the population of J cars
 Hypothesis Tests About m 1  m 2:
s 1 and s 2 Unknown
 p –Value and Critical Value Approaches
2. Specify the level of significance.  = .05

3. Compute the value of the test statistic.

( x1  x2 )  D0 (29.8  27.3)  0
t   4.003
s12 s22 (2.56) 2 (1.81) 2
 
n1 n2 24 28
 Hypothesis Tests About m 1  m 2:
s 1 and s 2 Unknown
 p –Value Approach
4. Compute the p –value.
The degrees of freedom for t are:
2 2 2
 (2.56) (1.81) 
  
 24 28 
df  2 2
 40.566  41
1  (2.56) 2  1  (1.81)2 
    
24  1  24  28  1  28 
Because t = 4.003 > t.05 = 1.683, the p–value < .05.
In fact, the p–value < .005.
 Hypothesis Tests About m 1  m 2:
s 1 and s 2 Unknown
 p –Value Approach
5. Determine whether to reject H0.
Because p–value <  = .05, we reject H0.
We are at least 95% confident that the miles-per-
gallon (mpg) performance of M cars is greater than
the miles-per-gallon performance of J cars?.
 Hypothesis Tests About m 1  m 2:
s 1 and s 2 Unknown
 Critical Value Approach
4. Determine the critical value and rejection rule.
For  = .05 and df = 41, t.05 = 1.683
Reject H0 if t > 1.683

5. Determine whether to reject H0.

Because 4.003 > 1.683, we reject H0.
We are at least 95% confident that the miles-per-
gallon (mpg) performance of M cars is greater than
the miles-per-gallon performance of J cars?.
 Inferences About the Difference Between
Two Population Means: Matched Samples
 With a matched-sample design each sampled item
provides a pair of data values.
 This design often leads to a smaller sampling error
than the independent-sample design because
variation between sampled items is eliminated as a
source of sampling error.
 Inferences About the Difference Between
Two Population Means: Matched Samples
 Example: Express Deliveries
A Chicago-based firm has documents that must
be quickly distributed to district offices throughout
the U.S. The firm must decide between two delivery
services, UPX (United Parcel Express) and INTEX
(International Express), to transport its documents.
 Inferences About the Difference Between
Two Population Means: Matched Samples
 Example: Express Deliveries
In testing the delivery times of the two services,
the firm sent two reports to a random sample of its
district offices with one report carried by UPX and
the other report carried by INTEX. Do the data on
the next slide indicate a difference in mean delivery
times for the two services? Use a .05 level of
significance.
 Inferences About the Difference Between
Two Population Means: Matched Samples

Delivery Time (Hours)

District Office UPX INTEX Difference
Seattle 32 25 7
Los Angeles 30 24 6
Boston 19 15 4
Cleveland 16 15 1
New York 15 13 2
Houston 18 15 3
Atlanta 14 15 -1
St. Louis 10 8 2
Milwaukee 7 9 -2
Denver 16 11 5
 Inferences About the Difference Between
Two Population Means: Matched Samples
 p –Value and Critical Value Approaches
1. Develop the hypotheses.
H0: md = 0 
Ha: md 
Let md = the mean of the difference values for the
two delivery services for the population
of district offices
 Inferences About the Difference Between
Two Population Means: Matched Samples
 p –Value and Critical Value Approaches
2. Specify the level of significance.  = .05

3. Compute the value of the test statistic.

 di ( 7  6... 5)
d    2. 7
n 10
 ( di  d ) 2 76.1
sd    2. 9
n 1 9
d  md 2.7  0
t   2.94
sd n 2.9 10
 Inferences About the Difference Between
Two Population Means: Matched Samples
 p –Value Approach
4. Compute the p –value.
For t = 2.94 and df = 9, the p–value is between
.02 and .01. (This is a two-tailed test, so we double
the upper-tail areas of .01 and .005.)

5. Determine whether to reject H0.

Because p–value <  = .05, we reject H0.
We are at least 95% confident that there is a
difference in mean delivery times for the two
services?
 Inferences About the Difference Between
Two Population Means: Matched Samples
 Critical Value Approach
4. Determine the critical value and rejection rule.

For  = .05 and df = 9, t.025 = 2.262.

Reject H0 if t > 2.262

5. Determine whether to reject H0.

Because t = 2.94 > 2.262, we reject H0.
We are at least 95% confident that there is a
difference in mean delivery times for the two
services?
 End of BS -I

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