St.

Paul University Philippines

Tuguegarao City, Cagayan 3500

BASIC EDUCATION UNIT

PAASCU LEVEL III ACCREDITED
ISO CERTIFIED

MODULE 3: TEST OF HYPOTHESIS

INTRODUCTION
One of the ultimate goals of every nation is to produce professionals who will contribute to scientific
knowledge through research. In research investigation, hypothesis testing is a vital procedure. In hypothesis
testing, we make decisions based on observations or data that are considered random variables. Thus in this
module, you shall learn different terminologies related to testing of hypothesis, hypothesis testing when the
variance is known and hypothesis testing when the variance is unknown. Step by step procedure in hypothesis
testing will be discussed and illustrative examples will be provided.

OBJECTIVES:
This module is designed for you to:
1. identify the parameter to be tested given a real life problem;
2. formulate the appropriate null and alternative hypotheses on population mean;
3. identify the appropriate form of test statistics;
4. identify the appropriate rejection region for a given level of significance;
5. compute for the test statistic; and
6. draw conclusion about the population mean based on the statistic value and the rejection region.

LESSON PROPER/DISCUSSION
In research procedures, one of the important things a researcher should do is to make assumptions.
These assumptions which may or may not be true are called statistical hypotheses.

Statitical Hypotheses
1. Null hypothesis, denoted by , is a statement saying that there is no significant difference between
population parameter and the value that is being claimed. It is the hypothesis to be tested.
2. Alternative hypothesis, denoted by , is a statement saying that there is a significant difference
between the population parameter and the value that is being claimed. This is a statement that will be
true once the null hypothesis is rejected.
 In each example, the rejection of the null hypothesis results in the acceptance of the
alternative hypothesis.

Example 1: The Head of the PE Department of a certain high school claims that the mean height of
Grade 7 students is 163cm. The mean height of randomly selected Grade 7 students is
161 cm. Using 0.01 significance level, can it be concluded that the mean height of Grade
7 students is different from 163 cm as claimed by the Head of the PE Department? The
following are the null and alternative hypotheses.

a. :µ=163
b. :µ≠163

Example 2: Last year the mean number of ladies’ bags produced by GB Company was 2,500 each
day. This year, the manager claims that there is an increase in the number of bags
produced. A researcher who wants to find out whether this is true counted the number of
bags produced each day for a period of one month. His computation resulted to a mean of
2,515 ladies’ bags. At 0.05 significance level, is there enough evidence to conclude that
the mean number of ladies’ bags produced by GB Company is greater than 2,500? The
following are the null and alternative hypotheses.

a. :µ=2,500
b. :µ>2,500

Example 3: The manager of TV Station claims that the mean number of people watching their new
sitcom in Manila is 500,000 each day. A student researcher who wants statistical
evidence on this claim conducted her own survey. Her survey resulted to a mean of
499,995. Using a 0.05 significance level, can it be concluded that the mean of people
watching the new sitcom is less than 500,000? The following are the null and alternative
hypotheses.

a. :µ=500,000
b. :µ<500,000

Example 4: The LB Company produces an average of 4% defective bulbs each day. Recently, some
of the machines were upgraded. Out of the 400 bulbs randomly selected only 14 bulbs
were found defective. Does this suggest that there is a decrease in the number of
defective bulbs produced each day? Use 0.05 significance level. The following are the
null and alternative hypotheses.

a. :p=0.04
b. :p<0.04

Rejection Region, Critical Value and Level of Significance

In deciding whether to reject or not to reject the null hypothesis, a researcher should follow some steps
and rules. A researcher needs to convert the sample mean to a value called test statistic, which is the basis to
make a decision and draw a conclusion.
 A rejection region should be established. In the figure below, the rejection region and the non-rejection
region are indicated.

Separating the two regions is a point called critical value, which is derived from the level of significance. If
the test statistic or computed value falls in the rejection region, that is, it falls beyond the critical point, then the
null hypothesis is rejected.
The level of significance alpha α, corresponds to the rejection region and the difference of
one and the alpha(1- α) corresponds to the area of the curve occupied by the non-rejection region. The most
commonly used values of alpha are 0.01, 0.05 and 0.10. Level of significance is the probability that the test
statistic would fall in the rejection when in fact it is actually true. If the level of significance used for instance is
5%, then this means that there is 5 chances in 100 that the null hypothesis would be rejected. That is whenever
the null hypothesis is true, the researcher is 95% confident that he/she would make the correct decision.

Types of Errors
Here is how a researcher usually commits mistake in decision making.
True State of Nature
Decision
The null hypothesis is true. The null hypothesis is false
Reject the null hypothesis Type I error Correct decision
Accept the null hypothesis Correct decision Type II error

One-Tailed and Two-Tailed Tests

1. One-tailed test
It is directional. If the alternative hypothesis contains thee greater than symbol (>), then the rejection
region is in the right tail of the curve. On the other hand, if the alternative hypothesis contains lesser
than symbol (<), then, the rejection region is on the left tail of the curve. The total alpha α is placed on
one tail only.
2. Two-tailed test
If the alternative hypothesis contains the inequality (≠) symbol, then the test is two-tailed. It is
non
directional. The rejection region is in both sides of the curve thus alpha α is divided equally between
two tails.

Example 1: What is the critical value when the test is two-tailed, the level of significance is 0.05, the
variance is known and n= 35?
Solution: If the test is two tailed, divide the level of significance by 2 and then subtract the quotient
rom 0.5. Since the variance is known and n>30, use the Areas under the Normal Curve
Table.

䁚
0.5-0.025=0.475

Therefore, at 5% level of significance, the critical value 䁚‫ׅ‬㐸

*If the test is one-tailed, the level of significance is not divided by 2.
 Example 2: What is the critical value when the test is two-tailed, the level of significance is 0.05, the
variance is unknown and n= 20?

Solution: If the variance is unknown and n<30, use the Table of t-Critical Value. There is a need to
find degrees of freedom: df= n-1=20-1=19. Divide a=0.05 by 2. In the Table of t-Critical
Values”, locate 19 then move along the column indicating an area of 0.05 in two tails.
The critical value is 2.093. However, if the test is one-tailed, alpha a shall not be divided
by 2. Instead of referring to the column indicating an area of 0.05 in two tails, refer to the
column indicating an area of 0.05 in one tail which is 1.729.

There are several steps and different test statistic that are used in testing hypothesis. In the succeeding
part of this module. The steps are being introduced as well as the test statistics. Examples are also provided for
your reference on how to apply those steps and test statistic. You may also refer to some other references for
further understanding since concepts and ideas about these topics are not limited.

Hypothesis Testing About a Population Mean When the Variance is Known

The following are the steps for hypothesis test for a population mean when the variance is known and
the population is assumed to follow normal distribution:

1. State the null and alternative hypotheses.

2. Choose a level of significance.
3. Compute the test statistic.
4. Determine the critical value or the p-value
5. Draw a conclusion

The appropriate test statistic for testing a claim about a population mean when the variance is
known and n>30 is

where:
= sample mean
µ = population mean
σ = population standard deviation
n = sample size

Example 1: The leader of the association of jeepney drivers claims that the average daily take home pay of
all jeepney drivers in Pasay City is Php 400.00. A random sample of 100 jeepney drivers in
Pasay City was interviewed and the average take home pay is found to be 425. Use a 0.05
significance level to find out if the average daily take home pay of all jeepney drivers is Pasay
City is different from Php 400.00. Assume that the population variance is Php 92.00.

Solution:
A. By Critical Value Method
Step 1. State the null and alternative hypotheses.
a. :µ=400
b. :µ≠400
Step 2. Choose the level of significance: a=0.05
Step 3. Compute the test statistic
 µ

‫ׅ‬

=2.72
Step 4. Determine the critical value.
The alternative hypothesis is non directional, hence, the two tailed test shall be used.
Divide α by 2, and then subtract the quotient from 0.05

䁚
0.5-0.025=0.475

Therefore, at 5% level of significance, the critical value 䁚‫ׅ‬㐸

Step 5. Draw a conclusion

Because the computed test statistic, z=2.72 falls within the rejection region (beyond the
critical value 䁚‫ׅ‬㐸 , reject the null hypothesis and accept the alternative hypothesis.
Conclude that the average daily take home pay of jeepney drivers is not equal to Php
400.00. This result is considered to be significant at α=0.05 level.

B. By p-Value Method

Rule of p-value method

a. If p-value ≤α, reject .
b. If p-value >, do not reject 䁚

Step 1. State the null and alternative hypotheses.

a. :µ=400
b. :µ≠400
Step 2. Choose the level of significance: a=0.05
Step 3. Compute the test statistic
µ

‫ׅ‬

=2.72
Step 4. Determine the p-value.
The computed test is z=2.72. Using the Areas Under the Standard Normal Curve Table,
the value of z=2.72 is 0.4967. Subtract 0.4967 from 0.5. Since this is a two-tailed test,
double the result. Hence, 0.05-0.4967= 0.0033. the p-value =2(0.0033)= 0.0066
 Step 5. Draw a conclusion
Since 0.0066 is less than 0.05, reject the null hypothesis and accept the alternative
hypothesis. Conclude that the average daily take home pay of jeepney drivers is not equal
to Php 400.00. This result is considered to be significant at α=0.05 level.

Hypothesis Testing About a Population Mean When the Variance is Unknown

When the variance is unknown and n<30, the appropriate test statistic for testing is the t-test for a single
mean.
µ

where:
= sample mean
µ = population mean
s = standard deviation of the sample
n = sample size

Example 1: It was announced over the radio that the average price of a kilogram of pork liempo in Metro
Manila is Php 195. However, a sample of 15 prices randomly collected from different markets in
Metro Manila Showed an average of Php 200 and a standard deviation of Php 9.5. Using a 0.05
level of significance, is there sufficient evidence to conclude that the average price of port
liempo is more than Php195? Normality is assumed over the population.
Solution:
A. By Critical Value Method
Step 1. State the null and alternative hypotheses.
c. :µ=195
d. :µ>195
Step 2. Choose the level of significance: a=0.05
Step 3. Compute the test statistic
µ

‫ׅ‬
‫ׅ‬䁚

=2.04
Step 4. Determine the critical value.
a. Find the degrees of freedom.
Df=n-1
=15-1
=14
b. The alternative hypothesis is directional. Hence the one-tailed test shall be used. Use
the Table of t Critical Values. Locate 14 in the first Column headed df. Because the
 test is one-tailed, alpha α=0.05. refer to the column indicating an area of 0.05 in one
tail. The critical value is 1.761.

Step 5. Draw a conclusion

Because the computed test statistic t=2.04 fall within the rejection region, reject the null
hypothesis. Using a 0.05 level of significance, there is sufficient evidence to conclude
that the average price of pork liempo in Metro Manila is more than Php 195.
B. By p-Value
Step 1. State the null and alternative hypotheses.
a. :µ=195
b. :µ>195
Step 2. Choose the level of significance: a=0.05
Step 3. Compute the test statistic
µ

‫ׅ‬
‫ׅ‬䁚

=2.04
Step 4. Determine whether or not the p-value is less than the level of significance.
a. Find the degrees of freedom.
Df=n-1
=15-1
=14
b. Significance level:α=0.05
The alternative hypothesis is directional. Hence, the one-tailed test sha shall be used.
Use the Table of t Critical Values. Under the column headed df, look at 14 and move
to the right along this row. The computed t-value of 2.04 is between 1.761 and 2.145
under the column headed 0.05 and 0.025, respectively. This means 0.05>p>0.025

Step 5. Make a decision

Since the p-value<0.05, reject the null hypothesis. Using a 0.05 level of significance,
there is a sufficient evidence to conclude that the average price of pork liempo in Metro
Manila is more than Php195.
Test Concerning Proportions
The Central Limit Theorem is not limited to sample means. It can also be applied to sample proportions.
The following are formulas that can be used as an appropriate test statistic to test hypothesis about population
proportion p.

t
or


where
=sample proportion
p=population proportion
n=sample size
q=1-p

Null hypothesis is usually written in the form

where = specific numerical value for the population proportion p

On the otherhand, alternative hypothesis can be any of the following:

(two-tailed test)
㌵ (one-tailed test)
(one-tailed test)

Example 1: It is believed that in the coming election, 65% of the voters in the province of Pampanga will
vote for the administration candidate for governor. Suppose 713 out of the 1150 randomly
selected voters indicate that they would vote for the administration candidate. At 0.01 level of
significance, find out the percentage of voters for the administration candidate is different from
65%.
Solution
Step 1. State the null and alternative hypotheses
䁚㐸
䁚㐸

Step 2. Choose the level of significance: a=0.05

Step 3. Compute the test statistic

h
= t
= 0.62


䁚㐸 㐸
= 䁚㐸 䁚㐸 
t
= -2.133
Step 4. Determine the critical value.
The alternative hypothesis is non directional, hence, the two tailed test shall be used.
Divide α by 2, and then subtract the quotient from 0.05
䁚
䁚
 0.5-0.05=0.45

Therefore, at 10% level of significance, the critical value 䁚㐸

Step 5. Make a decision

Since the computed test statistic z=-2133 falls in the rejection region, reject the null
hypothesis. Conclude that at 0.1 level of significance, there is enough evidence that the
percentage of voters for the administration candidate is different from 65%.

Module 3 in a NUTSHELL:
*Steps in testing hypothesis
1. State the null and alternative hypotheses.
2. Choose a level of significance.
3. Compute the test statistic.
4. Determine the critical value or the p-value
5. Draw a conclusion

*The appropriate test statistic for testing a claim about a population mean when the variance is known
and n>30 is

where:
= sample mean
µ = population mean
σ = population standard deviation
n = sample size

*When the variance is unknown and n<30, the appropriate test statistic for testing is the t-test for a
single mean.

where:
= sample mean
µ = population mean
s = standard deviation of the sample
n = sample size

*The following are formulas that can be used as an appropriate test statistic to test hypothesis about
population proportion p.
 t
or


Where
=sample proportion
p=population proportion
n=sample size
q=1-p

Null hypothesis is usually written in the form

where = specific numerical value for the population proportion p

On the otherhand, alternative hypothesis can be any of the following:

(two-tailed test)
㌵ (one-tailed test)
(one-tailed test)

FORMATIVE ASSESSMENT

Now, it is your turn to try these out! This 3-item formative assessment aims to help you practice the
skills you have acquired from the module. It will further help you master the concepts and skills, thus prepares
you for the summative assessment.

Test the hypotheses by using the given information.

1. :µ=84
:µ≠84

t
σ=10
n=35
α=0.05

2. :µ=85
:µ>85

t㐸
s=3
n=20
α=0.01

3. :p=0.36
:p<0.36

sample size=250
sample proportion=0.29
α=0.05
 *Note: After answering the 3 items, check your work by comparing your answers to the answer key at
the end of the module. For items which are incorrectly answered, try working on them again until you
will get the correct answer.

SUMMATIVE ASSESSMENT

At this point, you are now ready to take the summative assessment for module 3. Place your answers on
a whole sheet of paper. Show complete solution. (20 points)

1. Boys of a certain age are known to have a mean weight of μ = 85 pounds. A complaint is made that the
boys living in a municipal children's home are underfed. As one bit of evidence, n = 25 boys (of the
same age) are weighed and found to have a mean weight of ¯xx¯ = 80.94 pounds. It is known that the
population standard deviation σ is 11.6 pounds. Based on the available data, what should be concluded
concerning the complaint? (7 points)

2. It is assumed that the mean systolic blood pressure is μ = 120 mm Hg. In the Honolulu Heart Study, a
sample of n = 100 people had an average systolic blood pressure of 130.1 mm Hg with a standard
deviation of 21.21 mm Hg. Is the group significantly different from the regular population? (6 points)

3. The CEO of a large electric utility claims that 80 percent of his 1,000,000 customers are very satisfied
with the service they receive. To test this claim, the local newspaper surveyed 100 customers, using
simple random sampling. Among the sampled customers, 73 percent say they are very satisfied. Based
on these findings, can we reject the CEO's hypothesis that 80% of the customers are very satisfied? Use
a 0.05 level of significance. (7 points)

CONGRATULATIONS! YOU HAVE COMPLETED MODULE 3!

FORMATIVE ASSESSMENT (Answer Key)
Problem 1
Step 1. State the null and alternative hypotheses.
e. :µ=84
f. :µ≠84
Step 2. Choose the level of significance: a=0.05
Step 3. Compute the test statistic
µ

t t

h
=1.77
Step 4. Determine the critical value.
The alternative hypothesis is non directional, hence, the two tailed test shall be used.
Divide α by 2, and then subtract the quotient from 0.05

䁚
0.5-0.025=0.475

Therefore, at 5% level of significance, the critical value 䁚‫ׅ‬㐸

Step 5. Draw a conclusion

Because the computed test statistic, z=1.77 falls within the non-rejection region, accept
the null hypothesis.
Problem 2:
Step 1. State the null and alternative hypotheses.
g. :µ=85
h. :µ>85
Step 2. Choose the level of significance: a=0.01
Step 3. Compute the test statistic
µ

t㐸 t
h

=1.5
Step 4. Determine the critical value.
c. Find the degrees of freedom.
Df=n-1
=20-1
=19
 d. The alternative hypothesis is directional. Hence the one-tailed test shall be used. Use
the Table of t Critical Values. Locate 19 in the first Column headed df. Because the
test is one-tailed, alpha α=0.01 refer to the column indicating an area of 0.01 in one
tail. The critical value is 2.539.

Step 5. Draw a conclusion

Because the computed test statistic t=1.5 falls within the non-rejection region, accept the
null hypothesis.
Problem 3
Step 1. State the null and alternative hypotheses
䁚h㐸
h㐸

Step 2. Choose the level of significance: a=0.05

Step 3. Compute the test statistic


䁚 ‫ׅ‬ 䁚h㐸
=
䁚h㐸 䁚h㐸

= -2.3
Step 4. Determine the critical value.
The alternative hypothesis is directional, hence, the one-tailed test shall be used.

0.5-0.05=0.45

Therefore, at 5% level of significance, the critical value 䁚㐸

Step 5. Make a decision
Since the computed test statistic z= -2.3 falls in the rejection region, reject the null
hypothesis.