chp 17

TOPIC

HYPOTHESIS TESTING

SUBTOPIC

Hypothesis test fot population mean

Hypothesis tests for population proportion

Student Name
Date Started
Date Completed
Number of Exercises

Solutions

STATISTICAL HYPOTHESIS TESTING

17.1 Statistical Hypothesis Testing

Hypothesis testing

is the use of sample data to determine the probability

that a given hypothesis is true. Statistical decision-making is a part of inferential statistic

where conclusions are drawn from data that is subject to random variation. The sample
must be random for the hypothesis testing to be valid. In other words, we cannot carry out
a hypothesis test using a non-random sample from the population.

Null Hypothesis and Alternative Hypothesis

In hypothesis testing, we first make a guess about the population parameter. This guess,
which may or may not be true, is called a null hypothesis. Thus a null hypothesis can be of
the form

This is actually a statement about the probability distribution of the population concerned.
Very often, we formulate a null hypothesis for the purpose of rejecting it. Thus, the null
hypothesis is the assumed parameter which we will compare with the sample result. This null
hypothesis is rejected if it is unlikely that the sample result is so much different from the
hypothesized value.
The hypothesis which differs and is opposite to a given null hypothesis is called an
alternative hypothesis. It can take the forms

The alternative hypothesis is accepted if the null hypothesis is rejected.

Significance Level of a test

The significance level of a hypothesis test is the standard which is used to reject the null
hypothesis. The most common levels of significance used in hypothesis testing are 5% and
1 %.
If a level of 5% is used, then there is at most a 5 percent chance
that the sample value can be so much different from the hypothesized
value under null hypothesis, H0. In short, there is a probability of 0.05
of rejecting the null hypothesis when it is true.

Steps in Hypothesis Testing

Basically, hypothesis testing is the use of statistics to determine the probability that a given hypothesis is
true. The following six steps can be used to carry out a hypothesis test:

Step 1
State the null hypothesis and the alternative hypothesis. The null and the alternative hypotheses determine if we
will have to perform a one-tailed test or two-tailed test.
The two-tailed test is used if the hypotheses are of the form:
Null hypothesis
:
Alternative hypothesis
:

 The one-tailed test is used if the null hypothesis and the alternative hypothesis are of the form:
Null hypothesis
:
Alternative hypothesis
:

Step 2
Specify the level of significance of the test.
Step 3
Determine the critical value or values of the test statistic that will be used to assess the truth of the
nullhypothesis.

Step 4
Select the test statistic.

Step 5
Determine the actual value of the test statistic.

Step 6
Make the decision. However, to make the right decision, we must minimize errors or flaws in
the reasoning.
Two types of error can occur:
A Type I error occurs when we reject the null hypothesis when it is true. When we
specify that the significance level of the test is 5%, then the probability of rejecting
the null hypothesis when it is true is 0.05. In other words, the maximum probability
of a type I error occuring is 0.05. We write this as a = 0.05. Thus, the type I error is
also the significance level that we specify for the test.

In a two-tailed test, the null hypothesis is rejected for values of the test statistic which are

either sufficiently small or sufficiently large.

In a one-tailed test, the null hypothesis is rejected only for large values (or small values) of
the test statistics.

example

example

A market research company informs a prospective mini market entrepreneur that the average
income per household in the region is RM60 000 per annum. The household income is
assumed to be normally distributed with standard deviation of RM8 000, based on an early
study. For a random sample of 120 households, the mean household income is found to be
RM57 000. Test the null hypothesis that the population mean household income is RM60 000
at 5 percent significance level.

Hypothesis Tests for Population Mean

The normal probability distribution is used to test a hypothesized value of the population
mean of
a normally distributed population with known variance, and

a non-normally distributed population with a large sample size (n

the central limit theorem.

30) because of

example

A market research company informs a prospective mini market entrepreneur that the average
income per household in the region is RM60 000 per annum. The household income is
assumed to be normally distributed with standard deviation of RMS 000, based on an early
study. For a random sample of 120 households, the mean household income is found to be
RM57 000. Test the null hypothesis that the population mean household income is RM60 000
at 5 percent significance level.
USING HYPOTHESIS TESTING METHOD.

10

USING CONFIDENCE INTERVALS TO TEST HYPOTHESIS

11

12

13

Example

example
The nails produced by a machine are assumed to have a mean of 5.0 cm. A random sample
of 80 nails gives a mean of 5.2 cm and a standard deviation of 1.3 cm. Is there evidence that
the population mean has increased
(a) at the 5 % level?
(b) at the 1 % level?

14

Example
If the sample size of 300 is used and the same sample mean ot 5.2 and the same sample
standard deviation of 1.3 are obtained, test the hypothesis using 5% significance level.

15

Hypothesis Tests for Population Proportion

Hypothesis Testing By Direct Evaluation of Binomial Probabilities
Recall that if X is a random variable representing the number of successes in n repeated trials of an
experiment with two possible results (either success or failure), then the probability distribution of X is
a binomial distribution. If the probability of success is p% and the probability of failure is q, then we can
write:

example
An average of 80 out of every 100 patients has survived a particular severe infection. A new
drug was introduced. The drug was administered to a random sample of 16 patients with the
infection and 15 recovered. Does this provide evidence that the new drug is effective at 5%
significance level ?

16

A binomial variable can only take discrete values. However, as the

number of trials increases, the more closely the sampling distribution
resembles a normal curve. We can take advantage of this to use the
table of standard normal probabilities.

Example

Samsy Company claimed that at least 95% of the parts which the company supplied on
contract to car manufacturers conformed to specifications. A random sample of 500 parts was
tested, and 49 did not meet specifications. Can we accept the company's claim at a 5% level of
significance?

17

Various Exercise.
1.

The random variable X is distributed N( , 3.52). A test of the null hypothesis = 15

against the alternative hypothesis > 15 is required and the probability of a Type I error
should be 0.05. A random sample of 30 observations on X is taken.
(a) Find the critical region for the sample mean X.
The mean of the sample was 16.00.
(b) Find a 95% confidence interval for .
(c) Find P(Type II error) for the test in part (a) when = 17.
'I"he size of the sample is increased but P(Type 1 error) is still 0.05.
(d) State what effect this change will have on the critical value for X and on
(Type II error).

18

2.

When cars arrive at a certain T-junction they turn either right or left. Part of a study of
road usage involved deciding between the following alternatives.
Cars arc equally likely to turn right or left.
Cars arc more likely to turn right than left.
(a) State suitable null and alternative hypotheses, involving a probability, for a
significance test.
(b) Out of a random sample of 40 cars, n turned right. Use a suitable approximation to
find the least value of n for which the null hypothesis will be rejected at the 2%
significance level.
(c) For the lest described in (b), calculate the probability of making a Type II error
when, in fact, 80% of all cars arriving at the junction turn right.

19

20