Topic

Test of Hypothesis for proportion, Test of Hypothesis for

difference in proportion, Test of Hypothesis for Means and
difference in means, Test of Hypothesis for Standard
Deviation.

Presented By Roll no
Sanket Kadam 089
Yogesh Kalne 090
Sushant Kamble 091
Akshat Kanhere 092
Aniket Kuralkar 093
Yograj Lekurwale 094
Prachi Lembhe 095
Niranjan Mungekar 096
Sushmit Newgi 097
 Hypothesis Test for a Proportion
We can conduct hypothesis test for a proportion when following conditions are met :
 The sampling method is simple random sampling
 Simple random sampling refers to any sampling method that has the following properties.
 The population consists of N objects.
 The sample consists of n objects.
 If all possible samples of n objects are equally likely to occur, the sampling method is called
simple random sampling.
 Each sample point can result in just two possible outcomes. We call one of these outcomes a
success and the other, a failure.
 The sample includes at least 10 successes and 10 failures.
 The population size is at least 20 times as big as the sample size.
 This approach consists of four steps:
 (1) state the hypotheses,
 (2) formulate an analysis plan,
 (3) analyze sample data
Using sample data, find the test statistic and its associated P-Value.
Standard deviation. Compute the standard deviation (σ) of the sampling distribution.
σ = sqrt[ P * ( 1 - P ) / n ]
where P is the hypothesized value of population proportion in the null hypothesis, and n is the sample
size.
Test statistic. The test statistic is a z-score (z) defined by the following equation.
z = (p - P) / σ
where P is the hypothesized value of population proportion in the null hypothesis, p is the sample
proportion, and σ is the standard deviation of the sampling distribution.
P-value. The P-value is the probability of observing a sample statistic as extreme as the test statistic.
Since the test statistic is a z-score, use the Normal Distribution table to assess the probability associated with
the z-score.
(4) interpret results.
If the sample findings are unlikely, given the null hypothesis, the researcher rejects the null hypothesis. Typically, this involves comparing
the P-value to the significance level, and rejecting the null hypothesis when the P-value is less than the significance level.
Problem 1: Two-Tailed Test
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.
Solution: The solution to this problem takes four steps: (1) state the hypotheses, (2) formulate an analysis plan, (3) analyze
sample data, and (4) interpret results. We work through those steps below:

• State the hypotheses. The first step is to state the null hypothesis and an alternative hypothesis.
• Null hypothesis: P = 0.80
• Alternative hypothesis: P ≠ 0.80
• Note that these hypotheses constitute a two-tailed test. The null hypothesis will be rejected if the sample proportion is too big or if it is
too small.

• Formulate an analysis plan. For this analysis, the significance level is 0.05. The test method, shown in the next section, is a one-
sample z-test.
• Analyze sample data. Using sample data, we calculate the standard deviation (σ) and compute the z-score test
statistic (z).
σ = sqrt[ P * ( 1 - P ) / n ]
σ = sqrt [(0.8 * 0.2) / 100]
σ = sqrt(0.0016) = 0.04
z = (p - P) / σ = (.73 - .80)/0.04 = -1.75

where P is the hypothesized value of population proportion in the null hypothesis, p is the sample proportion,
and n is the sample size.
•Since we have a two-tailed test, the P-value is the probability that the z-score is less than -1.75 or greater than
1.75.
•We use the Normal Distribution calculator to find P(z < -1.75) = 0.04, and P(z > 1.75) = 0.04.
•Thus, the P-value = 0.04 + 0.04 = 0.08.

•Interpret results. Since the P-value (0.08) is greater than the significance level (0.05), we cannot reject the
null hypothesis.
Problem 2: One-Tailed Test

Suppose the previous example is stated a little bit differently. Suppose the CEO claims that at least 80 percent of
the company's 1,000,000 customers are very satisfied. Again, 100 customers are surveyed using simple random
sampling. The result: 73 percent are very satisfied. Based on these results, should we accept or reject the CEO's
hypothesis? Assume a significance level of 0.05.
Solution: The solution to this problem takes four steps: (1) state the hypotheses, (2) formulate an analysis plan, (3)
analyze sample data, and (4) interpret results. We work through those steps below:

State the hypotheses. The first step is to state the null hypothesis and an alternative hypothesis.
Null hypothesis: P >= 0.80
Alternative hypothesis: P < 0.80

•Note that these hypotheses constitute a one-tailed test. The null hypothesis will be rejected only if the sample
proportion is too small.

•Formulate an analysis plan. For this analysis, the significance level is 0.05. The test method, shown in the next
section, is a one-sample z-test.
• Analyze sample data. Using sample data, we calculate the standard deviation (σ) and compute the z-score test
statistic (z).

σ = sqrt[ P * ( 1 - P ) / n ] = sqrt [(0.8 * 0.2) / 100]

σ = sqrt(0.0016) = 0.04
z = (p - P) / σ = (.73 - .80)/0.04 = -1.75

where P is the hypothesized value of population proportion in the null hypothesis, p is the sample proportion, and
n is the sample size.

•Since we have a one-tailed test, the P-value is the probability that the z-score is less than -1.75. We use
the Normal Distribution calculator to find P(z < -1.75) = 0.04.
Thus, the P-value = 0.04.

•Interpret results. Since the P-value (0.04) is less than the significance level (0.05), we cannot accept the null
hypothesis.
Unsolved Example 1:
Suppose a consumer group suspects that the proportion of households that have three cell phones is 30%. A cell
phone company has reason to believe that the proportion is not 30%. Before they start a big advertising campaign,
they conduct a hypothesis test. Their marketing people survey 150 households with the result that 43 of the
households have three cell phones. Make a decision to reject or accept the hypothesis.
 Hypothesis Test: Difference Between Proportions
This approach consists of four steps:
(1) state the hypotheses,
(2) formulate an analysis plan,
(3) analyze sample data
(4) Interpret Results
Using sample data, complete the following computations to find the test statistic and its associated P-Value.
 Pooled sample proportion. Since the null hypothesis states that P1=P2, we use a pooled sample proportion (p)
to compute the standard error of the sampling distribution.
p = (p1 * n1 + p2 * n2) / (n1 + n2)
where p1 is the sample proportion from population 1, p2 is the sample proportion from population 2, n1 is the
size of sample 1, and n2 is the size of sample 2.
 Standard error. Compute the standard error (SE) of the sampling distribution difference between two
proportions.
SE = sqrt{ p * ( 1 - p ) * [ (1/n1) + (1/n2) ] }
where p is the pooled sample proportion, n1 is the size of sample 1, and n2 is the size of sample 2.
 Test statistic. The test statistic is a z-score (z) defined by the following equation.
z = (p  - p ) / SE
1 2

where p  is the proportion from sample 1, p  is the proportion from sample 2, and SE is the standard error of
1 2

the sampling distribution.

P-value. The P-value is the probability of observing a sample statistic as extreme as the test statistic. Since
the test statistic is a z-score, use the Normal Distribution to assess the probability associated with the z-
score. (See sample problems at the end of this lesson for examples of how this is done.)

(4) Interpret Results

If the sample findings are unlikely, given the null hypothesis, the researcher rejects the null hypothesis. Typically,
this involves comparing the P-value to the significance level, and rejecting the null hypothesis when the P-value is
less than the significance level.
Problem 1: Two-Tailed Test

Suppose the Acme Drug Company develops a new drug, designed to prevent colds. The company states that the
drug is equally effective for men and women. To test this claim, they choose a a simple random sample of 100
women and 200 men from a population of 100,000 volunteers.
At the end of the study, 38% of the women caught a cold; and 51% of the men caught a cold. Based on these
findings, can we reject the company's claim that the drug is equally effective for men and women? Use a 0.05 level of
significance.

Solution:

The solution to this problem takes four steps: (1) state the hypotheses, (2) formulate an analysis plan, (3) analyze
sample data, and (4) interpret results. We work through those steps below:
 State the hypotheses. The first step is to state the null hypothesis and an alternative hypothesis.
Null hypothesis: P1 = P2
Alternative hypothesis: P1 ≠ P2

Note that these hypotheses constitute a two-tailed test. The null hypothesis will be rejected if the proportion
from population 1 is too big or if it is too small.
 Formulate an analysis plan. For this analysis, the significance level is 0.05. The test method is a two-proportion
z-test.
 Analyze sample data. Using sample data, we calculate the pooled sample proportion (p) and the standard error
(SE). Using those measures, we compute the z-score test statistic (z).
 p = (p  * n  + p  * n ) / (n  + n )
1 1 2 2 1 2

p = [(0.38 * 100) + (0.51 * 200)] / (100 + 200)

p = 140/300 = 0.467
SE = sqrt{ p * ( 1 - p ) * [ (1/n1) + (1/n2) ] }
SE = sqrt [ 0.467 * 0.533 * ( 1/100 + 1/200 ) ]
SE = sqrt [0.003733] = 0.061
z = (p1 - p2) / SE = (0.38 - 0.51)/0.061 = -2.13
Since we have a two-tailed test, the P-value is the probability that the z-score is less than -2.13 or greater than 2.13.
 We use the Normal Distribution calculator to find P(z < -2.13) = 0.017, and P(z > 2.13) = 0.017. Thus, the P-value = 0.017 +
0.017 = 0.034.
 Interpret results. Since the P-value (0.034) is less than the significance level (0.05), we cannot accept the null hypothesis.
Problem 2: One-Tailed Test
Suppose the previous example is stated a little bit differently. Suppose the Acme Drug Company develops a new
drug, designed to prevent colds. The company states that the drug is more effective for women than for men. To
test this claim, they choose a a simple random sample of 100 women and 200 men from a population of 100,000
volunteers.
At the end of the study, 38% of the women caught a cold; and 51% of the men caught a cold. Based on these
findings, can we conclude that the drug is more effective for women than for men? Use a 0.01 level of significance.
Solution:
 State the hypotheses. The first step is to state the null hypothesis and an alternative hypothesis.
Null hypothesis: P  >= P
1 2

Alternative hypothesis: P  < P 1 2

Note that these hypotheses constitute a one-tailed test. The null hypothesis will be rejected if the proportion of
women catching cold (p ) is sufficiently smaller than the proportion of men catching cold (p ).
1 2

 Formulate an analysis plan. For this analysis, the significance level is 0.01. The test method is a two-proportion
z-test.
 Analyze sample data. Using sample data, we calculate the pooled sample proportion (p) and the standard error
(SE). Using those measures, we compute the z-score test statistic (z).
p = (p  * n  + p  * n ) / (n  + n )
1 1 2 2 1 2

p = [(0.38 * 100) + (0.51 * 200)] / (100 + 200)

p = 140/300 = 0.467
 SE = sqrt{ p * ( 1 - p ) * [ (1/n ) + (1/n ) ] }
1 2

SE = sqrt [ 0.467 * 0.533 * ( 1/100 + 1/200 ) ]

SE = sqrt [0.003733] = 0.061
z = (p  - p ) / SE = (0.38 - 0.51)/0.061 = -2.13
1 2

where p  is the sample proportion in sample 1, where p  is the sample proportion in sample 2, n  is the size of
1 2 1

sample 1, and n  is the size of sample 2.

2

Since we have a one-tailed test, the P-value is the probability that the z-score is less than -2.13. We use the Normal
Distribution to find P(z < -2.13) = 0.017. Thus, the P-value = 0.017.
 Interpret results. Since the P-value (0.017) is greater than the significance level (0.01), we cannot reject the null
hypothesis.

Unsolved Example 1:
Comparing Wal-Mart’s with Other Firms’ Insurance Coverage
Recall the 2003 press release by the AFL-CIO:
 Wal-Mart exemplifies the harmful trend among America’s large employers to shirk health insurance
responsibilities at the cost of their workers and community….Fewer than half of Wal-Mart workers are
insured under the company plan – just 46 percent. This rate is dramatically lower than the 66 percent
of workers at large private firms who are insured under their companies’ plans, according to a new
Commonwealth Fund study released today.
This press release claims that there is a 20% difference in the proportion of workers with insurance when we compare Wal-Mart
to other large private firms. In hypothesis testing for two population proportions, we cannot test a claim about a specific
difference between two population proportions. Instead, we test a claim that the proportion of Wal-Mart workers with health
insurance is less than the proportion of workers at large private firms with health insurance.
Suppose we select a random sample of 50 Wal-Mart workers and find 23 have health insurance. Suppose also that a random
sample of 70 workers of large private firms had 43 with health insurance.
For this test, we choose a 5% level of significance (α = 0.05).
 Test of hypothesis for Mean
This topic explains how to conduct a hypothesis test of a mean, when the following
conditions are met:
1. The sampling method is simple random sampling.
2. The sampling distribution is normal or nearly normal.
3. The population distribution is normal.
4. The population distribution is symmetric, unimodal, without outliers, and the
sample size is 15 or less.
5. The population distribution is moderately skewed, unimodal, without outliers, and
the sample size is between 16 and 40.
6. The sample size is greater than 40, without outliers.
 This approach consists of four steps:

(1) State the hypotheses (2) Formulate an analysis plan

Formula:

(3) Analyze sample data (4) Interpret results.

Solved Example
Q1) A random sample of 50 items gives the mean 6.2 and variance 10.24. Can it be regarded as drawn
from a normal population with mean 5.4 at 5% level of significance?

Solution:
n=50 ; ; σ = 10.24
i) Null Hypothesis (): μ=5.4
Alternative Hypothesis (): μ≠5.4
ii)Test statistic:
1.77
z= 1.77
iii)Level of significance(α)
α= 0.05
iv) Critical Value:
For, α= 0.05 z=1.96

v) Decision:
Z=1.77
Since 1.77< 1.96
Therefore the Null Hypothesis () is accepted

Yes ,it can be regarded as drawn from a normal population with mean 5.4 at 5% level
of significance
Unsolved Example 1:
A factory has a machine that dispenses 80ml of a fluid in a bottle and employee believes average
amount of fluid is not 80ml. Using 40 samples, he measures the average amount dispensed by the
machine to be 78ml with a standard deviation of 2.5
Find
a)State the null and alternative hypotheses
b)At a 5% significance level, is there enough evidence to support the idea that the machine is not
working properly?
Unsolved Example 2:
A company manufacturers car batteries with an average lifespan of two or more years. An engineer
believes this value to be less. Using ten samples he measures the average lifespan to be 1.8 years
with a standard deviation of 0.15.
(a)State the null and alternative hypotheses
(b) At a 99% confidence level, is there enough evidence to discard the null hypothesis?
Test of hypothesis for difference in means

σ1,n1, x̅1 σ2,n2, x̅2

Population 1 Population 2

Uses:-
• Clinical Trials
• Advertising Spend
• Manufacturing
 Tests for Differences between means: Large sample sizes
• When both sample sizes are greater than 30

• H0: µ1 = µ2 Null hypothesis: there is no difference

• H1: µ1 ≠ µ2 Alternative hypothesis: a difference exists
• α= 0.05 Level of significance for testing this hypothesis
• σ1=s1 σ2=s2 (as sd of population are unknown)
Z=
Z=

Z= -2.83
 Tests for Differences between means: Small sample size

• Since sample size is small we cannot assume s1= σ1 and without that we wont have enough data to
test the hypothesis.

• We have to make an assumption σ1= σ2.

• Calculate pooled estimator of σ square.

• Then calculate estimated standard deviation.

• Then calculate t value

• Look in t table.
Solved Example 1:
• A random sample of 1000 male workers has an average weekly wage as rs 47 and S.D Rs 28 . A random
sample of 1500 female workers has an average weekly wage as rs 49 and S.D Rs 40 . Is the difference
between their average weekly wages significant ? Z ≤ 1.96
• Solution :
H0= the difference between wages is not significant
n1= 1000 x̅1 =47 S1=28
n2= 1500 x̅2=49 S2= 40
Difference = | x̅1-x̅2 | =| 47-49 | =2

=
 |Z|= Difference /S.E = 2/1.36=1.47
Z < 1.96 ( 5 % )
H0 is accepted .

Solved Example 2:
The means of two random samples of size 600 and 800 are 11.8 and 10.8 respectively . Can You say that these
samples are taken from the population having standard deviation 5 ? (use 1% significance level)

H0 : The difference between both the means is not significant .

n1 = 600 x̅1 =11.8
n2=800 x̅2 = 10.8 σ = 5
Difference = | x̅1-x̅2 | = |11.8- 10.8 |= 1
 = = 0.27
| Z | = Difference /S.E = 1/0.27 = 3.7
Z > 2.58 (1 % )
H0 is rejected

Unsolved Example 1:
Two independent samples of observations were collected. For the first sample of 60 elements, the mean was 86
and the standard deviation 6. The second sample of 75 elements had a mean of 82 and a standard deviation of 9.
(a) Compute the estimated standard error of the difference between the two means.
(b) Using α= 0.01, test whether the two samples can reasonably be considered to have come from populations
with the same mean.
Unsolved Example 2:
 Hypothesis Test of Standard Deviations

What is the test for standard deviation?

 Hypothesis testing for variance and standard deviation uses a chi square distribution similarly to
other forms of hypothesis testing.

 A chi-square test ( Snedecor and Cochran, 1983) can be used to test if the standard deviation of a
population is equal to a specified value. This test can be either a two-sided test or a one-sided test.
Steps for Hypothesis Test for a Population Standard Deviations

 Step 1 : State the null and alternate hypothesis.

 Step 2: Decide on a level of significance, α.

 Step 3 : Compute the test statistic.

 Step 4 : Determine the P-value.

 Step 5 : Reject the null hypothesis if the P- value is less than the level of significance, α.

 Step 6 : State the conclusion.

 Formula used for Hypothesis Test of Standard Deviations


χ2 = Standardized test statistics for σ and σ2 
 n = Sample size.

 s= standard deviation

 s2 = sample variance.

 σ2 = population variance

 Solved Example 1:
A sample random sample of 40 men results in a standard deviation of 11.3 beats per minute. The normal
range of pulse rates of adults is typically given to 60 to 100 beats per minute. If the range rule of thumb is
applied to that normal range, the result is standard deviation of 10 beats per minute . Use a sample results
with 0.05 significance level to test the claim that pulse rates of men have standard deviation greater than 10
beats per minute.
Test Statistics = (n-1) * s2
Solution

N = 40 σ2
S = 11.3 T.S. = (39) * (11.3)2
α = 0.05 102
Claim: σ > 10
T.S. = 49.799
Null Hypothesis, H0: σ = 10
Alternate Hypothesis, Ha: σ ≠ 10
Conclusion
 Since σ > 10, this is a Right Tailed test.
 P- value = 0.1152
 Now p- value > significance level i.e 0.1152 > 0.05
 So the result will be “FAILED TO REJECT THE HYPOTHESIS”
 We can thus conclude that there is not sufficient evidence to support the alternate hypothesis and
the claim that pulse rates of men have standard deviation greater than 10 beats per minute is
false.

Unsolved Example 1:
A simple random sample of 25 filtered 100mm cigarettes is obtained , and the tar content f each
cigarette is measured. The sample has a standard deviation of 3.7 mg. Use a significance level of 0.05
to test the claim that the tar content of filtered 100mm cigarettes has a standard deviation different
from 3.2 mg, which is the standard deviation for unfiltered king size cigarettes.
Unsolved Example 2:
A small brewery has purchased a used automatic bottle filler. The technical specifications state that the volume
distributed in a bottle is normally distributed with mean of 541 ml and a standard deviation of 2 ml. To test
whether or not the bottle filler is still calibrated, the brewery decides to fill 20 bottles and obtains a sample
mean of 540 ml and a sample standard deviation 2.6 ml.
a) Test that the specifications for the standard deviation are correct at the 5 % level of significance.
b) Would your conclusion in part (a) be different if the level of significance was changes to 2.5 % ? Justify?
 Bibliography
Reference-

1. Sharma JK. Business Statsitcs, Pearson publishing house, 2006

2. Anderson, Sweeney, Willams. Statistics for business and Economics. Pearson Publishing house, 2006
3. Statistics for management Richard I levin David s Rubin Sanjay Rastogi Masood Husain Siddiqui
4. https://www.statology.org/hypothesis-testing-real-life-examples/
5. https://stattrek.com/hypothesis-test/proportion.aspx
6. https://sphweb.bumc.bu.edu/otlt/mph-modules/bs/bs704_hypothesistest-means
proportions/bs704_hypothesistest-means-proportions_print.html
7. https://stattrek.com/hypothesis-test/difference-in-proportions.aspx
8. https://scholar.harvard.edu/files/msen/files/lecture_14.pdf
Thank You