HYPOTHESIS TESTING EXAMPLES

TEST OF HYPOTHESIS CONCERNING NORMAL POPULATION, INFINITE, LARGE OR SMALL SAMPLES, WITH KNOWN POPULATION VARIANCE. ( Z TEST)
If the size of sample exceeds 30 it should be regarded as a large sample. a) Testing Hypothesis about population mean . Z= x p/n

x = sample mean p = population s.d. n= sample size Population size is infinite

SOME HYPOTHESIS TESTING EXAMPLES

ILLUSTRATION1 (TWO-TAILED TEST)
The mean lifetime of a sample of 100 light tubes produced by a company is found to be 1,580 hours Test the hypothesis at 5% level of significance that the mean lifetime of the tubes produced by the company is 1,600 hours with standard deviation of 90 hours. Solution: z= -2.22. Critical value of Z = 1.96

ILLUSTRATION2 ONE TAILED (UPPER TAILED)

An insurance company is reviewing its current policy rates. When originally setting the rates they believed that the average claim amount will be maximum Rs180000. 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 Rs195000. Assuming that the standard deviation of claims is Rs50000 and set = .05, test to see if the insurance company should be or not.

SOLUTION
Step 1: Set the null and alternative hypotheses H0 : 180000 H1 : > 180000 Step 2: Calculate the test statistic

z= = x /n
= 1:897 Step 3: Set Rejection Region

Step 4: Conclude We can see that 1:897 < 1:96, thus our test statistic is not in the rejection region. Therefore we fail to reject the null hypothesis. The insurance company should not be concerned about their current policies.

ILLUSTRATION3 ONE TAILED (LOWER TAILED)

Trying to encourage people to stop driving to campus, the university claims that on average it takes at least 30 minutes to find a parking space on campus. I dont think it takes so long to find a spot. In fact I have a sample of the last five times I drove to campus, and I calculated x = 20. Assuming that the time it takes to find a parking spot is normal, and that = 6 minutes, then perform a hypothesis test with level = 0.10 to see if my claim is correct.

SOLUTION
Step 1: Set the null and alternative hypotheses H0 : H1 : 30 < 30

Step 2: Calculate the test statistic Z= x /n = -3.727

STEP 3: SET REJECTION REGION

STEP 4: CONCLUDE
We can see that -3.727 <-1.28 ( or absolute value is higher than the critical value) , 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 less than 30, thus I have proven that the mean time to find a parking space is less than 30.

EXERCISE

REJECTION REGION AND CONCLUSION

TEST OF HYPOTHESIS CONCERNING NORMAL POPULATION, FINITE, LARGE OR SMALL SAMPLES, WITH KNOWN POPULATION VARIANCE. ( Z TEST)
Z= x ( /n) (N-n)/(N-1) N= population size

ILLUSTRATION 3 ( PAGE NO203)

POPULATION NORMAL, POPULATION INFINITE,

SAMPLE SIZE SMALL AND VARIANCE OF POPULATION UNKNOWN

t statistic. is unknown, sample size small. Population .

t=x ( s/n)

with d.f. =(n-1)

ILLUSTRATION 5 ( PAGE NO 204) AND 6 (PAGE NO 206)