RESEARCH METHODS

TUTORIAL 1
PARAMETRIC HYPOTHESIS: ONE SAMPLE

Part A: Formulating the Hypotheses

Formulate the Null and Alternative Hypotheses for the following statements:
1. The state lottery office claims that the average household income of those people playing the
lottery is at least $37,000.

2. The marketing department for a hand calculator claims the battery pack performs 20,000
calculations before it has to be recharged.

3. A pharmaceutical manufacturer is concerned that the mean impurity concentration in pills

should not exceed 3%.

4. A company selling new econometrics computer software advertises that firms using this
software obtain, on average during the first year, a yield of at least 10% on their initial
investments.

5. A professional rock climber claims that he can climb a particular mountain within half an
hour.

6. The manufacturer of a new product claims that his product will increase output per machine
by at least 38 units per hour.

Part B: One Sample Hypothesis

Question 1
Shoprite supermarket sells 5000 packets of cereal which it now believes to be not as improved as the
new brand they recently had in each of its stores. It has decided to test-market the new brand of cereal
in some of its stores. After a month, the 15 stores have sold an average of 5200 packets each, with a
standard deviation of 500 packets. Should all supermarkets switch to selling the new brand at the 1%
level of significance?
a. State the null and alternative hypotheses
b. How many degrees of freedom are there?
c. State the decision rule
d. What is the value of the test statistic?
e. Determine the t-critical
f. What is your decision regarding the null hypothesis?
g. Estimate the p-value
h. Should all supermarkets switch to selling the new brand at the 1% level of significance? Is the
difference due to chance? Explain briefly!

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Question 2
In Ghana, mothers who live in poverty generally have babies with lower birth-weight than those who
don't live in poverty. While the average birth-weight of babies born in Ghana is about 3,300g, the
average birth-weight of women living in poverty is at most 2,800g. Recently, Korle Bu introduced an
innovative new pre-natal care programme to reduce the number of low birth-weight babies. In 2013,
25 mothers, all living in poverty participated in the programme. Data drawn from hospital records
showed that the babies born to these women had the birth-weight of 3,075g with a standard deviation
of 500g.
a. Formulate the null and alternative hypotheses.
b. Is Z statistic used here? Why?
c. Compute the value of the test statistic
d. What is your decision regarding the null hypothesis?
e. Estimate the p-value and use it to decide
f. Has the programme been effective at improving birth-weight of babies born to poor
women? Is the difference due to chance? Explain briefly

Question 3
Fairfield Automotive is the local dealership selling Honda automobiles. It recently stated in an
advertisement that Honda owners average more than 85,000 miles before trading in or selling their
Hondas. To test this, an independent agency selected a simple random sample of 25 Honda owners
who have either traded or sold their Hondas and determined the number of miles on the car when
the owner parted with the car. It plans to test Fairfield’s claim at alpha 10% level.
a. Formulate the null and alternative hypotheses that you would use in order to disprove the
company’s claim and explain each hypothesis in words.
b. If the sample mean is 86,200 miles and the sample standard deviation is 12,000 miles, what
conclusion should be reached about the claim? Use both the critical value and the p-value
approaches to conclude
c. What difference would it make to your conclusion had a 1% significance level been chosen
instead of a 10% level?

Question 4
The Odo Rice restaurant claims that the average waiting time of customers to be served is not above
the benchmark of 2.75 minutes set by the Ghana Food Quality and Delivery Assurance and hence,
they are the best in customer service. To determine the efficiency of the company’s claim, a research
quality assurance student sampled the time spent by 22 customers at their Accra Circle branch. It
was revealed that the mean waiting time was 3 minutes with a standard deviation of 1 minute. Use
0.01 significance level.
a. Formulate the null and alternative hypotheses both in statistics and in words
b. Justify your choice of the test statistic and compute the value of the test statistic and the
critical value
c. Estimate the p-value
d. What is your decision regarding the null hypothesis using the p-value approach?
e. Is Odo Rice the best in customer service? Conclude practically but briefly. If so, is the
difference due to chance? Explain.
f. What difference would it make had a significance level of 20% been chosen. Do not
compute. Just explain.
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