Newbold Sbe8 ch10 Ge

Statistics for
Business and Economics

8th Global Edition
Chapter 10
Two Population Hypothesis

Tests
Copyright © 2013 Pearson Education Ch. 10-1

Chapter Goals
After completing this chapter, you should be able to:
◼ Test hypotheses for the difference between two population means
◼ Two means, matched pairs
◼ Independent populations, population variances known
◼ Independent populations, population variances unknown but
equal
◼ Complete a hypothesis test for the difference between two
proportions (large samples)
◼ Use the F table to find critical F values
◼ Complete an F test for the equality of two variances

Two Sample Tests
Two Sample Tests
Population Population
Means, Means, Population Population
Dependent Independent Proportions Variances
Samples Samples
Examples:
Same group Group 1 vs. Proportion 1 vs. Variance 1 vs.
before vs. after independent Proportion 2 Variance 2
treatment Group 2

10.1
Dependent Samples
Tests of the Difference Between Two Normal
Population Means: Dependent Samples
Dependent
Samples Tests Means of 2 Related Populations
◼ Paired or matched samples
◼ Repeated measures (before/after)
◼ Use difference between paired values:
di = xi - yi
◼ Assumptions:
◼ Both Populations Are Normally Distributed

Test Statistic:
Dependent Samples
The test statistic for the mean
Population difference is a t value, with
Means,
n – 1 degrees of freedom:
Dependent
Samples
d
For tests of the
t= where d=
 d i
sd n
following form:
n
H0: μx – μy  0
H0: μx – μy ≤ 0
sd = sample standard dev. of differences
H0: μx – μy = 0 n = the sample size (number of pairs)

Decision Rules: Matched Pairs
Matched or Paired Samples
Lower-tail test: Upper-tail test: Two-tail test:
H0: μx – μy  0 H0: μx – μy ≤ 0 H0: μx – μy = 0
H1: μx – μy < 0 H1: μx – μy > 0 H1: μx – μy ≠ 0
a a a/2 a/2
-ta ta -ta/2 ta/2

Reject H0 if t < -tn-1, a Reject H0 if t > tn-1, a Reject H0 if t < -tn-1 , a/2
or t > tn-1 , a/2
d
t=
Where sd has n - 1 d.f.
n
Matched Pairs Example
◼ Assume you send your salespeople to a “customer
service” training workshop. Has the training made a
difference in the number of complaints? You collect
the following data:

d = n
di
Number of Complaints: (2) - (1)
Salesperson Before (1) After (2) Difference, di
= - 4.2
C.B. 6 4 - 2
T.F. 20 6 -14
M.H. 3 2 - 1
Sd =
 i
(d − d) 2
R.K. 0 0 0 n −1
M.O. 4 0 - 4
-21 = 5.67

Matched Pairs: Solution
◼ Has the training made a difference in the number of
complaints (at the a = 0.05 level)?
Reject Reject
H0: μx – μy = 0
H1: μx – μy  0
a/2 a/2
a = .05 d = - 4.2 - 2.776 2.776
- 1.66
Critical Value = ± 2.776
d.f. = n − 1 = 4
Decision: Do not reject H0
(t stat is not in the reject region)
Test Statistic:
Conclusion: There is not a
d − 4.2
t= = = −1.66 significant change in the
sd / n 5.67/ 5 number of complaints.
10.2
Independent Samples
Tests of the Difference Between Two Normal
Population Population Means: Dependent Samples
means,
independent Goal: Form a confidence interval
samples for the difference between two
population means, μx – μy
◼ Different populations
◼ Unrelated
◼ Independent
◼ Sample selected from one population has no effect on the

sample selected from the other population
◼ Normally distributed
Difference Between Two Means
(continued)
Population means,
independent
samples
σx2 and σy2 known Test statistic is a z value
σx2 and σy2 unknown
σx2 and σy2

assumed equal Test statistic is a a value from the
Student’s t distribution
σx2 and σy2
assumed unequal
σx2 and σy2 Known
Population means, Assumptions:

independent
samples ▪ Samples are randomly and
independently drawn
σx2 and σy2 known
* ▪ both population distributions
σx2 and σy2 unknown are normal
▪ Population variances are

known

σx2 and σy2 Known
(continued)
When σx2 and σy2 are known and

Population means,
both populations are normal, the
independent
samples
variance of X – Y is
2
σx
2
σy
σ 2X− Y = +
σx2 and σy2 known
* nx ny
…and the random variable

(x − y) − (μX − μY )
Z=
σ 2x σ y
2
+
nX nY
has a standard normal distribution

Test Statistic,
σx2 and σy2 Known
Population means, H0 : μx − μy = 0
independent
samples The test statistic for
μx – μy is:
σx2 and σy2 known
*
z=
( x − y)
2
σx
2
σy
+
nx ny

Hypothesis Tests for
Two Population Means
Two Population Means, Independent Samples
H0: μx  μy H0: μx ≤ μy H0: μx = μy

H1: μx < μy H1: μx > μy H1: μx ≠ μy
i.e., i.e., i.e.,

Decision Rules
Two Population Means, Independent
Samples, Variances Known
a a a/2 a/2
-za za -za/2 za/2

Reject H0 if z < -za Reject H0 if z > za Reject H0 if z < -za/2
or z > za/2

σx2 and σy2 Unknown,
Assumed Equal

independent
▪ Samples are randomly and
samples
independently drawn
σx2 and σy2 known ▪ Populations are normally

distributed
σx2 and σy2
assumed equal * unknown but assumed equal
σx2 and σy2

assumed unequal
Assumed Equal
(continued)
Population means,
independent
samples
▪ The population variances
are assumed equal, so use
the two sample standard
σx2 and σy2 known deviations and pool them to
estimate σ
▪ use a t value with
σx2 and σy2 (nx + ny – 2) degrees of
assumed equal * freedom
σx2 and σy2
assumed unequal
Test Statistic,
σx2 and σy2 Unknown, Equal
σx2 and σy2 unknown The test statistic for

H0 :μx – μy = 0 is:
σx2 and σy2
assumed equal * ( x − y)
σx2 and σy2 t=
assumed unequal sp2 sp2
+
nx ny
Where t has (n 1 + n2 – 2) d.f.,
and
(n x − 1)s2x + (n y − 1)s2y
sp2 =
nx + ny − 2
Decision Rules
Two Population Means, Independent
Samples, Variances Unknown
a a a/2 a/2
-ta ta -ta/2 ta/2

Reject H0 if Reject H0 if Reject H0 if
t < -t (n1+n2 – 2), a t > t (n1+n2 – 2), a t < -t (n1+n2 – 2), a/2 or
t > t (n1+n2 – 2), a/2
Pooled Variance t Test: Example
You are a financial analyst for a brokerage firm. Is there
a difference in dividend yield between stocks listed on the
NYSE & NASDAQ? You collect the following data:
NYSE NASDAQ
Number 21 25
Sample mean 3.27 2.53
Sample std dev 1.30 1.16
Assuming both populations are

approximately normal with
equal variances, is
there a difference in average
yield (a = 0.05)?
Calculating the Test Statistic
H0: μ1 - μ2 = 0 i.e. (μ1 = μ2)
H1: μ1 - μ2 ≠ 0 i.e. (μ1 ≠ μ2)
The test statistic is:
t=
(X − X )
1 2
=
(3.27 − 2.53 ) = 2.040
1 1  1 1 
S  + 
2
1.5021 + 
p
 n1 n2   21 25 
(n
S = 1
2 − 1)S1
2
+ (n 2 − 1)S 2
2
=
(21 − 1)1.30 2
+ (25 − 1)1.16 2
= 1.5021
(n1 − 1) + (n2 − 1) (21 - 1) + (25 − 1)
p

Solution
Reject H0 Reject H0
H0: μ1 - μ2 = 0 i.e. (μ1 = μ2)
H1: μ1 - μ2 ≠ 0 i.e. (μ1 ≠ μ2)
a = 0.05 .025 .025
df = 21 + 25 − 2 = 44 -2.0154 0 2.0154 t
Critical Values: t = ± 2.0154
2.040
Test Statistic: Decision:
3.27 − 2.53
t= = 2.040 Reject H0 at a = 0.05
 1 1 
1.5021  +  Conclusion:
 21 25  There is evidence of a
difference in means.
Assumed Unequal

independent
▪ Samples are randomly and
samples
independently drawn
σx2 and σy2 known ▪ Populations are normally

distributed
σx2 and σy2 unknown and assumed
assumed equal unequal
σx2 and σy2
assumed unequal
Copyright © 2013 Pearson Education
* Ch. 10-23
Assumed Unequal
(continued)
Forming interval estimates:

Population means,
independent
▪ The population variances are
samples
assumed unequal, so a pooled
variance is not appropriate
σx2 and σy2 known
▪ use a t value with  degrees
σx2 and σy2 unknown of freedom, where
2
 s2x s2y 
σx2 and σy2 ( ) + ( )
assumed equal  n x n y 
v= 2
σx2 and σy2
2 2
 sx   sy2

  /(n y − 1)
assumed unequal
Copyright © 2013 Pearson Education
*   /(n x − 1) +
 nx 
 n
  y

Ch. 10-24
Test Statistic,
σx2 and σy2 Unknown, Unequal
σx2 and σy2 unknown The test statistic for

H0: μx – μy = 0 is:
σx2 and σy2
assumed equal
(x − y)
σx2 and σy2 t=
assumed unequal * s2
s 2
x
+ y
nX nY
2
 s2x s2y 
( ) + ( )
 n x n y 
Where t has  degrees of freedom: v= 2
 s2 
2
 s2x 
  /(n x − 1) +  y  /(n y − 1)
n 
 nx   y
10.3
Two Population Proportions
Tests of the Difference Between Two
Population Proportions (Large Samples)
Population
proportions
Goal: Test hypotheses for the
difference between two population
proportions, Px – Py
Assumptions:
Both sample sizes are large,
nP(1 – P) > 5
(continued)
◼ The random variable

Population
proportions
(pˆ x − pˆ y ) − (Px − Py )
Z=
Px (1− Px ) Py (1− Py )
+
nx ny
has a standard normal distribution

Test Statistic for
The test statistic for
Population H 0: P x – P y = 0
proportions is a z value:
z=
( pˆ x − pˆ y )
pˆ 0 (1− pˆ 0 ) pˆ 0 (1− pˆ 0 )
+
nx ny
n xpˆ x + n ypˆ y
Where pˆ 0 =
nx + ny
Decision Rules: Proportions
Population proportions
H0: Px – Py  0 H0: Px – Py ≤ 0 H0: Px – Py = 0
H1: Px – Py < 0 H1: Px – Py > 0 H1: Px – Py ≠ 0
a a a/2 a/2
-za za -za/2 za/2

Reject H0 if z < -za Reject H0 if z > za Reject H0 if z < -za/2
or z > za/2

Example:
Is there a significant difference between the

proportion of men and the proportion of
women who will vote Yes on Proposition A?
◼ In a random sample, 36 of 72 men and 31 of

50 women indicated they would vote Yes
◼ Test at the .05 level of significance

Example:
(continued)
◼ The hypothesis test is:

H0: PM – PW = 0 (the two proportions are equal)
H1: PM – PW ≠ 0 (there is a significant difference between
proportions)
◼ The sample proportions are:
◼ Men: p̂M = 36/72 = .50
◼ Women: p̂ W = 31/50 = .62
▪ The estimate for the common overall proportion is:
n pˆ M + n W pˆ W 72(36/72) + 50(31/50) 67
pˆ 0 = M
= = = .549
nM + n W 72 + 50 122

Example:
(continued)
Reject H0 Reject H0
The test statistic for PM – PW = 0 is:

.025 .025
z=
( pˆ − pˆ W )
M
pˆ 0 (1− pˆ 0 ) pˆ 0 (1− pˆ 0 )
+ -1.96 1.96
n1 n2
-1.31
=
( .50 − .62)
 .549 (1− .549) .549 (1− .549)  Decision: Do not reject H0
 + 
 72 50  Conclusion: There is not
= − 1.31 significant evidence of a

difference between men
Critical Values = ±1.96 and women in proportions
For a = .05 who will vote yes.
10.4
Tests of Equality of
Two Variances
▪ Goal: Test hypotheses about two

Tests for Two
Population
population variances
Variances H0: σx2  σy2 Lower-tail test
H1: σx2 < σy2
F test statistic
H0: σx2 ≤ σy2 Upper-tail test
H1: σx2 > σy2
H0: σx2 = σy2

Two-tail test
H1: σx2 ≠ σy2
The two populations are assumed to be
independent and normally distributed
Hypothesis Tests for
Two Variances
(continued)
The random variable

Tests for Two
2 2
Population s /σ
Variances F= x
2
x
2
s /σ y y
F test statistic
Has an F distribution with (nx – 1)
numerator degrees of freedom and
(ny – 1) denominator degrees of
freedom
Denote an F value with 1 numerator and 2
denominator degrees of freedom by Fν1,ν 2
Test Statistic
Tests for Two The critical value for a hypothesis test

Population about two population variances is
Variances
2
s
F test statistic
F= x
2
s y
where F has (nx – 1) numerator

degrees of freedom and (ny – 1)
denominator degrees of freedom

Decision Rules: Two Variances
Use sx2 to denote the larger variance. H0: σx2 = σy2
H0: σx2 ≤ σy2 H1: σx2 ≠ σy2
H1: σx2 > σy2
a a/2
0 0 F
Do not Reject H0 F Do not
reject H0
Reject H0
Fnx −1,ny −1,α / 2
reject H0 Fnx −1,ny −1,α
Reject H0 if F  Fnx −1,ny −1,α ◼ rejection region for a two-

tail test is:
Reject H0 if F  Fnx −1,ny −1,α / 2
where sx2 is the larger of
the two sample variances
Example: F Test
You are a financial analyst for a brokerage firm. You

want to compare dividend yields between stocks listed
on the NYSE & NASDAQ. You collect the following data:
NYSE NASDAQ
Number 21 25
Mean 3.27 2.53
Std dev 1.30 1.16
Is there a difference in the

variances between the NYSE &
NASDAQ at the a = 0.10 level?

F Test: Example Solution
◼ Form the hypothesis test:
H0: σx2 = σy2 (there is no difference between variances)
H1: σx2 ≠ σy2 (there is a difference between variances)
◼ Find the F critical values for a = .10/2:

Degrees of Freedom:
Fnx −1, ny −1, α / 2
◼ Numerator
(NYSE has the larger

standard deviation): = F20 , 24 , 0.10/2 = 2.03
◼ nx – 1 = 21 – 1 = 20 d.f.
◼ Denominator:
◼ ny – 1 = 25 – 1 = 24 d.f.
F Test: Example Solution
(continued)
◼ The test statistic is: H0: σx2 = σy2

H1: σx2 ≠ σy2
s2x 1.30 2
F= 2 = = 1.256
s y 1.16 2
a/2 = .05
Do not
F
Reject H0
reject H0
◼ F = 1.256 is not in the rejection
region, so we do not reject H0 F20 , 24 , 0.10/2 = 2.03
◼ Conclusion: There is not sufficient evidence

of a difference in variances at a = .10

Some Comments on
Hypothesis Testing
◼ A test with low power can result from:

◼ Small sample size
◼ Large variances in the underlying populations
◼ Poor measurement procedures
◼ If sample sizes are large it is possible to find
significant differences that are not practically
important
◼ Researchers should select the appropriate level
of significance before computing p-values

Two-Sample Tests in EXCEL
For paired samples (t test):

◼ Data | data analysis | t-test: paired two sample for means
For independent samples:

◼ Independent sample z test with variances known:
◼ Data | data analysis | z-test: two sample for means
For variances…
◼ F test for two variances:
◼ Data | data analysis | F-test: two sample for variances

Chapter Summary
◼ Compared two dependent samples (paired

samples)
◼ Performed paired sample t test for the mean
difference
◼ Compared two independent samples
◼ Performed z test for the differences in two means
◼ Performed pooled variance t test for the differences
in two means
◼ Compared two population proportions
◼ Performed z-test for two population proportions

Chapter Summary
(continued)
◼ Performed F tests for the difference between

two population variances
◼ Used the F table to find F critical values

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Statistics for

Business and Economics

Two Population Hypothesis

Copyright © 2013 Pearson Education Ch. 10-1

Copyright © 2013 Pearson Education Ch. 10-2

Copyright © 2013 Pearson Education Ch. 10-3

Copyright © 2013 Pearson Education Ch. 10-4

Copyright © 2013 Pearson Education Ch. 10-5

-ta ta -ta/2 ta/2

Copyright © 2013 Pearson Education Ch. 10-7

◼ Sample selected from one population has no effect on the

σx2 and σy2 known Test statistic is a z value

σx2 and σy2 unknown

σx2 and σy2

Population means, Assumptions:

▪ Population variances are

Copyright © 2013 Pearson Education Ch. 10-11

When σx2 and σy2 are known and

…and the random variable

has a standard normal distribution

Copyright © 2013 Pearson Education Ch. 10-13

Lower-tail test: Upper-tail test: Two-tail test:

H0: μx  μy H0: μx ≤ μy H0: μx = μy

Copyright © 2013 Pearson Education Ch. 10-14

-za za -za/2 za/2

Copyright © 2013 Pearson Education Ch. 10-15

Population means, Assumptions:

σx2 and σy2 known ▪ Populations are normally

σx2 and σy2

σx2 and σy2 unknown The test statistic for

-ta ta -ta/2 ta/2

Assuming both populations are

Copyright © 2013 Pearson Education Ch. 10-21

Population means, Assumptions:

σx2 and σy2 known ▪ Populations are normally

Forming interval estimates:

σx2 and σy2 unknown The test statistic for

◼ The random variable

has a standard normal distribution

Copyright © 2013 Pearson Education Ch. 10-27

-za za -za/2 za/2

Copyright © 2013 Pearson Education Ch. 10-29

Is there a significant difference between the

◼ In a random sample, 36 of 72 men and 31 of

◼ Test at the .05 level of significance

Copyright © 2013 Pearson Education Ch. 10-30

◼ The hypothesis test is:

Copyright © 2013 Pearson Education Ch. 10-31

The test statistic for PM – PW = 0 is:

= − 1.31 significant evidence of a

▪ Goal: Test hypotheses about two

H0: σx2 = σy2

The random variable

Tests for Two The critical value for a hypothesis test

where F has (nx – 1) numerator

Copyright © 2013 Pearson Education Ch. 10-35

Reject H0 if F  Fnx −1,ny −1,α ◼ rejection region for a two-

You are a financial analyst for a brokerage firm. You

Is there a difference in the

Copyright © 2013 Pearson Education Ch. 10-37

◼ Find the F critical values for a = .10/2:

(NYSE has the larger

◼ The test statistic is: H0: σx2 = σy2