Section 7: Week start at 29/12

Interval
Estimation for
Two Populations

Mean Variance
Propotion
(Last Section) (cancelled)

Tow Population Proportion

Problem 1

A public health researcher wants to know how two high schools, one in the inner city and one in
the suburbs, differ in the percentage of students who smoke. A random survey of students gives
the following results:

Population n Smokers
1 (inner-city) 125 47
2 (suburban) 153 52

What is a 90 percent confidence interval for the difference between the smoking rates in the two
schools?

Answer
The proportion of smokers in the inner-city school is p = 47/125 = .376.

The proportion of smokers in the suburban school is p = 52/153 = .340.

0.036 ± (1.65)(0.096)

0.036 ± 0.1584

0.1944 𝑡𝑜 − 𝑂. 1224

The researcher can be 90 percent certain that the true population proportion of smokers in the
inner-city high school is almost equal to the proportion of smokers in the suburban high school.

Thus, since the confidence interval contains zero, there is no difference between the two types of
schools at α = .10.
 Hypothesis Testing
5 steps are required for hypothesis testing:
1- Determine the null hypothesis.
2- Determine the alternative hypothesis.
3- Level of significant
4- Select the distribution to use and calculate the value of the test statistic:
5- Draw a conclusion: the null hypothesis will be rejected if the test statistic lies in the
rejection region.

Test for one population

Test for one

population

Mean Variance Proportion

Sigma known
Sigma Unknown

Sigma known

Problem 1

An insurance company is reviewing its current policy rates. When originally setting the rates
they believed that the average claim amount was $1,800. They are concerned that the true mean
is actually higher than this, because they could potentially lose a lot of money. They randomly
select 40 claims, and calculate a sample mean of $1,950. Assuming that the standard deviation of
claims is $500, and set = .05, test to see if the insurance company should be concerned.
Answer

1. Set the null and alternative hypotheses

H0 : µ ≤ 1800
H1 : µ > 1800

2. Calculate critical value

Z = Z0.95 = 1.65

3. Calculate the test statistic

x − 0 1950 −1800
Z calc = = =1.897
/ n 500 / 40

4. Decision

We can see that z calc >z critical, thus reject H0

5. Interpretation

We can see that 1.897 > 1.65, thus our test statistic is in the acceptance region. Therefore we
reject the null hypothesis. We can conclude that the insurance company concern is true.

Problem 2
A sample of 40 sales receipts from a grocery store has 𝑥 𝑏𝑎𝑟 = $137 and σ = $30.2. Use these
values to test whether or not the mean sales at the grocery store are different from $150, use
α = 0.01
Answer
1) Null and alternative hypotheses:
H0: μ = 150
H1: μ ≠ 150

2) Determine the rejection region:

Given α = 0.01, we find the Z value of
this α/2 considering that problem is two
Tailed problem
Z0.5-α/2(Right) = 2.58
3) The distribution to use and the test
statistic:
σ is known and n > 30, therefore we use
Z-Distribution
(x − μ) 137 − 150
Z= = = −2.722
 30.2
n 40

4) Conclusion
We can see that -2.722 < -2.58, thus our test statistic is in the rejection region. Therefore
we reject the null hypothesis in favor of the alternative. We can conclude that the mean is
significantly different from $150, thus we have proven that the mean sales at the grocery
store is not $150.

Testing for Variance

Problem 2

Tests in Mr. Wildmans past statistics classes have scores with a standard deviation equal to 14.1.
One of his current classes now has 27 test scores with a standard deviation of 9.3. Use a 0.01
level of significance to test the claim that this current class has less variation than past classes.

Answer:

N = 27, s = 9.3

2.99,26 = 12.2
Since c2 < critical, Thus we have enough evidence to reject H0. Thus can claim that the new class
has less variance than the past classes.
Testing for proportion
Two population

Test for one

population

Mean Proportion

Testing for two proportion

Problem 3
An experiment is conducted investigating the long-term effects of early childhood intervention
programs. In one experiment, the high-school drop outs rate of the experimental group (which
attended the early childhood program) and the control group (which did not) were compared. In
the experimental group, 73 of 85 students graduated from high school. In the control group, only
43 of 82 students graduated. Is this difference statistically significant? Significance level = 0.05
Answer
1. When testing differences between proportions, the null hypothesis is that the two
population proportions are equal.
H0: 𝜋1 = 𝜋2
H1: 𝜋1 ≠ 𝜋2 .
2. Calculate critical value
zα/2 = ±1.96
3. Calculate the test statistic
 73
𝑝1 = = 0.85 and
85
43
𝑝2 = = 0.52
82
𝑋1 +𝑋2 73+43 116
𝑝̅ = = = = 0.69 and
𝑛1 + 𝑛2 85+82 167

𝑞̅ = 1 − 𝑝̅ = 0.31
(𝑝1 − 𝑝2 )−(𝜋1 − 𝜋2 ) 0.33 0.33
𝑧𝑐𝑎𝑙𝑐 = 1 1
= 1 1
= 0.07 = 4.6
√𝑝̅𝑞̅(𝑛 +𝑛 ) √0.69∗0.31( + )
1 2 85 82

4. Decision
We can see that z calc (4.6) > zα/2 (1.96), thus reject H0.

5. Interpretation
Therefore, we can conclude that the difference between the two population proportions is
significant.