Chapter Topics

•Hypothesis Testing Methodology

•Z Test for the Mean (Known)
• p-Value Approach to Hypothesis Testing
•Connection to Confidence Interval Estimation
•One Tail Test
• t Test of Hypothesis for the Mean
•Z Test of Hypothesis for the Proportion
© 1999 Prentice-Hall, Inc. Chap. 8 - 1
 What is a Hypothesis?
A hypothesis is an I assume the mean GPA
assumption about the of this class is 3.5!
population parameter.
 A parameter is a
Population mean or
proportion
 The parameter must be
identified before
analysis.

© 1984-1994 T/Maker Co.

© 1999 Prentice-Hall, Inc. Chap. 8 - 2

 The Null Hypothesis, H0
• States the Assumption (numerical) to be tested
e.g. The average # TV sets in US homes is at
least 3 (H0:  3)

• Begin with the assumption that the null

hypothesis is TRUE.
(Similar to the notion of innocent until proven
•Refers to the Status Quo
guilty)

•Always contains the ‘ = ‘ sign

•The Null Hypothesis may or may not be rejected.
© 1999 Prentice-Hall, Inc. Chap. 8 - 3
 The Alternative Hypothesis, H1

• Is the opposite of the null hypothesis

e.g. The average # TV sets in US homes
is less than 3 (H1:  < 3)
• Challenges the Status Quo
• Never contains the ‘=‘ sign
• The Alternative Hypothesis may or may
not be accepted

© 1999 Prentice-Hall, Inc. Chap. 8 - 4

 Identify the Problem

Steps:
 State the Null Hypothesis (H :  3)
0

 State its opposite, the Alternative

Hypothesis (H1:  < 3)
 Hypotheses are mutually exclusive &
exhaustive
 Sometimes it is easier to form the

alternative hypothesis first.

© 1999 Prentice-Hall, Inc. Chap. 8 - 5

 Hypothesis Testing Process

Assume the
population
mean age is 50.
(Null Hypothesis) Population
The Sample
Is X  20    50? Mean Is 20
No, not likely!

REJECT
Null Hypothesis Sample

© 1999 Prentice-Hall, Inc. Chap. 8 - 6

 Reason for Rejecting H0

Sampling Distribution
It is unlikely
that we would ... Therefore, we
get a sample reject the null
mean of this hypothesis that
value ...  = 50.
... if in fact this were
the population mean.

20  = 50 Sample Mean
H0
© 1999 Prentice-Hall, Inc. Chap. 8 - 7
 Level of Significance, 
• Defines Unlikely Values of Sample Statistic
if Null Hypothesis Is True
 Called Rejection Region of Sampling
Distribution
• Designated (alpha)
 Typical values are 0.01, 0.05, 0.10
• Selected by the Researcher at the Start
• Provides the Critical Value(s) of the Test
© 1999 Prentice-Hall, Inc. Chap. 8 - 8
 Level of Significance, and
the Rejection Region
 Critical
H0: 3
H1:  < 3 Value(s)
Rejection 0
Regions 
H0:   3
H1:  > 3
0
/2
H0:  3
H1:   3
0

© 1999 Prentice-Hall, Inc. Chap. 8 - 9

 Errors in Making Decisions

• Type I Error
 Reject True Null Hypothesis
 Has Serious Consequences

 Probability of Type I Error Is 

 Called Level of Significance

• Type II Error
 Do Not Reject False Null Hypothesis
 Probability of Type II Error Is  (Beta)

© 1999 Prentice-Hall, Inc. Chap. 8 - 10

 Result Possibilities
H0: Innocent
Jury Trial Hypothesis Test
Actual Situation Actual Situation
Verdict Innocent Guilty Decision H0 True H0 False
Do Not Type II
Innocent Correct Error Reject 1-
Error ( )
H0
Type I Power
Guilty Error Correct Reject Error
H0 (1 - )
( )

© 1999 Prentice-Hall, Inc. Chap. 8 - 11

 & Have an
Inverse Relationship
Reduce probability of one error
and the other one goes up.

© 1999 Prentice-Hall, Inc. Chap. 8 - 12

 Z-Test Statistics (Known)

• Convert Sample Statistic (e.g., ) to

X
Standardized Z Variable

X  X X   Test Statistic
Z 
X 
n
• Compare to Critical Z Value(s)
 If Z test Statistic falls in Critical Region, Reject
H0; Otherwise Do Not Reject H0

© 1999 Prentice-Hall, Inc. Chap. 8 - 13

 p Value Test

• Probability of Obtaining a Test Statistic More

Extreme  or ) than Actual Sample Value
Given H0 Is True
• Called Observed Level of Significance
 Smallest Value of a H0 Can Be Rejected
• Used to Make Rejection Decision
 If p value  Do Not Reject H0
 If p value <, Reject H0

© 1999 Prentice-Hall, Inc. Chap. 8 - 14

 Hypothesis Testing: Steps

Test the Assumption that the true mean #

of TV sets in US homes is at least 3.
1. State H0 H0 : 3
2. State H1 H1 : 
3. Choose  = .05
4. Choose n n = 100
5. Choose Test: Z Test (or p Value)

© 1999 Prentice-Hall, Inc. Chap. 8 - 15

 Hypothesis Testing: Steps
(continued)

Test the Assumption that the average # of

TV sets in US homes is at least 3.
6. Set Up Critical Value(s) Z = -1.645
7. Collect Data 100 households surveyed
8. Compute Test Statistic Computed Test Stat.= -2
9. Make Statistical Decision Reject Null Hypothesis
10. Express Decision The true mean # of TV set is less
than 3 in the US households.

© 1999 Prentice-Hall, Inc. Chap. 8 - 16

 One-Tail Z Test for Mean
(Known)
• Assumptions
 Population Is Normally Distributed
 If Not Normal, use large samples

 Null Hypothesis Has  or Sign Only

• Z Test Statistic:
x  x x
z 
x 
n

© 1999 Prentice-Hall, Inc. Chap. 8 - 17

 Rejection Region

H0:  H0: 0

H1:  < 0 H1:  > 0
Reject H0 Reject H 0

 

0 Z 0 Z
Must Be Significantly Small values don’t contradict H0
Below = 0 Don’t Reject H0!
© 1999 Prentice-Hall, Inc. Chap. 8 - 18
 Example: One Tail Test

Does an average box of

cereal contain more than
368 grams of cereal? A
random sample
_ of 25 boxes
showed X = 372.5. The 368 gm.
company has specified to
be 15 grams. Test at the H0: 368
0.05 level. H1: > 368

© 1999 Prentice-Hall, Inc. Chap. 8 - 19

 Finding Critical Values:
One Tail
Standardized Normal
What Is Z Given = 0.05? Probability Table (Portion)
.50
-.05 Z = 1 Z .04 .05 .06
.45 1.6 .5495 .5505 .5515
 = .05
1.7 .5591 .5599 .5608

0 1.645 Z 1.8 .5671 .5678 .5686

Critical Value 1.9 .5738 .5744 .5750
= 1.645
© 1999 Prentice-Hall, Inc. Chap. 8 - 20
 Example Solution: One Tail

H0: 368 Test Statistic:

H1:  > 368
X 
= 0.025 Z  1.50
n = 25

n
Critical Value: 1.645
Decision:
Reject
Do Not Reject at = .05
.05
Conclusion:
No Evidence True Mean
0 1.645 Z Is More than 368
© 1999 Prentice-Hall, Inc. Chap. 8 - 21
 p Value Solution
p Value is P(Z 1.50) = 0.0668
Use the
alternative p Value 1.0000
hypothesis .0668
to find the - .9332
direction of .0668
the test. .9332
0 1.50 Z

From Z Table: Z Value of Sample

Lookup 1.50 Statistic
© 1999 Prentice-Hall, Inc. Chap. 8 - 22
 p Value Solution

(p Value = 0.0668)  ( = 0.05).

Do Not Reject.
p Value = 0.0668

Reject
= 0.05

0 1.50 Z
Test Statistic Is In the Do Not Reject Region
© 1999 Prentice-Hall, Inc. Chap. 8 - 23
 Example: Two Tail Test

Does an average box of

cereal contains 368 grams of
cereal? A random sample of
25 boxes showed X = 372.5.
The company has specified 368 gm.
to be 15 grams. Test at the
0.05 level.
H0: 368
H1:  368

© 1999 Prentice-Hall, Inc. Chap. 8 - 24

 Example Solution: Two Tail

H0: 386 Test Statistic:

H1:  386
X   372.5  368
= 0.05 Z   1.50
 15
n = 25 n 25
Critical Value: ±1.96
Decision:
Reject
Do Not Reject at  = .05
.025 .025
Conclusion:
No Evidence that True
-1.96 0 1.96 Z Mean Is Not 368
© 1999 Prentice-Hall, Inc. Chap. 8 - 25
 Connection to
Confidence Intervals
_
For X = 372.5oz,  = 15 and n = 25,
The 95% Confidence Interval is:
372.5 - (1.96) 15/ 25 to 372.5 + (1.96) 15/ 25
or
366.62    378.38
If this interval contains the Hypothesized mean
(368), we do not reject the null hypothesis.
It does. Do not reject.
© 1999 Prentice-Hall, Inc. Chap. 8 - 26
 t-Test: Unknown
Assumptions
 Population is normally distributed
 If not normal, only slightly skewed & a large

sample taken
Parametric test procedure
t test statistic X 
t
S
n

© 1999 Prentice-Hall, Inc. Chap. 8 - 27

 Example: One Tail t-Test

Does an average box of cereal

contain more than 368 grams
of cereal? A random sample of
36 boxes showed X = 372.5,
and  15. Test at the 0.01
368 gm.
level.

is not given, H0: 368

H1:  368

© 1999 Prentice-Hall, Inc. Chap. 8 - 28

 Example:Z Test for Proportion

•Problem: A marketing company claims

that it receives 4% responses from its
Mailing.
•Approach: To test this claim, a random
sample of 500 were surveyed with 25
responses.
•Solution: Test at the  = .05 significance
level.
© 1999 Prentice-Hall, Inc. Chap. 8 - 29
 Z Test for Proportion:
Solution
H0: p .04 Test Statistic:
H1: p  .04
p - ps .04 -.05
 = .05 Z  = = 1.14
p (1 - p) .04 (1 - .04)
n = 500 n 500
Critical Values:  1.96
Decision:
Reject Reject Do not reject at  = .05
.025 .025 Conclusion:
We do not have sufficient
evidence to reject the company’s
0 Z claim of 4% response rate.
© 1999 Prentice-Hall, Inc. Chap. 8 - 30