Lesson 2: Tests Involving the Population Mean

Large Sample Test Statistic for Testing a Population Mean (when 𝝈 is known)

When testing the null hypothesis 𝐻0 : 𝜇 = 𝜇0 where the sample size n is large and 𝜎 is known, the test
statistic is
̅ − 𝝁𝟎
𝒙
𝒁= 𝝈
√𝒏

where 𝑥̅ = sample mean

n = sample size

𝜇0 = hypothesized value of the population mean; and

𝜎 = population standard deviation

Here, the test statistic Z has approximately a standard normal distribution when 𝐻0 is true.

For example, #1:

Consider the following hypotheses:

𝐻0 : 𝜇 = 250

𝐻𝑎 : 𝜇  250

The sample mean is 253, and the sample size is 50. The population is normally distributed with a standard
deviation of 16. Test the hypotheses at 0.05 level of significance.

Step 1: State the null and alternative hypotheses.

𝐻0 : 𝜇 = 250

𝐻𝑎 : 𝜇  250

Step 2: Select a level of significance.

Level of significance (∝) = 0.05 or 5%

Step 3: Select the test statistic.

Since the population is normally distributed and 𝜎 is known, we use Z – test as our test statistic.

𝑥̅ − 𝜇0
𝑍= 𝜎
√𝑛

Where 𝑥̅ = sample mean

n = sample size

𝜇0 =Hypothesized value of the population means; and

𝜎 = population standard deviation

Step 4: Formulate the decision rule.

We need to determine the critical values of Z for the specified level of significance. Since the alternative
hypothesis contains the symbol , we have a two tailed-test, and half of 0.05, or 0.025, is placed in each tail.

Critical region, z, two- tailed test, ∝ = 0.05

Step 5: Compute the value of the test statistic.

From the given information, the sample mean is 253, the hypothesized mean is 250, the population standard
deviation is 16, and the sample size is 50. Substituting these values to the test statistic given in step 3, we have

𝑥̅ − 𝜇0
𝑍= 𝜎
√𝑛
253 − 250
𝑍=
16
√50

Z ≈ 1.33

Step 6: Make a decision.

Since the computed value of Z based from the sample is neither bigger than 1.96 nor smaller than -1.96, we do not
reject 𝐻0 . There is insufficient evidence to say that the mean is different from 250.
For example #2:

An oil company claims that their new gasoline formula contains an additive that results in increased fuel
efficiency. To test this claim, they collaborate with an automobile company to send 30 identical cars to do a road trip from
Manila to Dumaguete. The average mileage of these cars turned out to be 10.8 km/L. Without the additive, it is known
that these cars’ average mileage is 10 km/L, with a standard deviation of 1.4km/L. At 0.01 level of significance, should
we agree with company’s claim?

Solution:

Step 1: State the null and alternative hypotheses.

𝐻0 : 𝜇 = 10

𝐻𝑎 : 𝜇 > 10

Step 2: Select a level of significance.

Level of significance (∝) = 0.01

Step 3: Select the test statistic.

Since the test involves the population mean, the sample size is large, and standard deviation is 1.4 is
known, we use the formula
𝑥̅ − 𝜇0
𝑍= 𝜎
√𝑛

Step 4: Formulate the decision rule.

The alternative hypothesis is that 𝜇 > 10. Therefore, we have a right-tailed test. To determine the critical
value, we need to find the value of 𝑧0.01 , which is the z-value that leaves an area of 0.01 to its right. Using the z-
table in Appendix B, we have 𝑧𝛼 = 2.33. Hence, we shall reject 𝐻0 if the value of the test statistic Z > 𝑧0.01 ≈
2.33.

Critical region, z, right tailed test, ∝ = 0.01

Step 5: Compute the value of the test statistic.

Based from the given, the sample mean is 10.8 and the sample size is 30. Also, the hypothesized value of the
mean is 10. Substituting these values to the test statistic gives

𝑥̅ − 𝜇0
𝑍= 𝜎
√𝑛
 10.8 − 10
𝑍= ≈ 3.13
1.4
√30

Step 6: Make a decision.

Since the computed value of the test statistic is larger than 2.33, we reject 𝐻0 . The average mileage is therefore
greater than 10 km/L.
Large Sample Test Statistic for Testing a Population Mean (when 𝝈 is unknown)

When testing the null hypothesis 𝐻0 : 𝜇 = 𝜇0 where the sample size n is large and 𝜎 is known, the test
statistic is
𝑥̅ − 𝜇0
𝑍= 𝑠
√𝑛

where 𝑥̅ = sample mean

n = sample size

𝜇0 = hypothesized value of the population mean; and

s = sample standard deviation

Here, the test statistic Z has approximately a standard normal distribution when 𝐻0 is true.

For example, #1

A soft drink dispenser is designed to dispense 330 mL of drink per cup. However, there have been recent
reports to the management of a fast- food restaurant of both underfilled and overfilled cups. Seeking to
investigate this matter, they fill up 50 cups using this machine. If the mean amount of drink in the 50 cups is
325 mL with standard deviation of 20 mL, is there cause for concern for the management? Use a level of
significance of 0.01.

Solution:

Step 1: State the null and alternative hypothesis

𝐻𝑜: 𝜇 = 330

𝐻𝑎: 𝜇 ≠ 330

Step 2: Select a level of significance.

∝ = 0.01

Step 3: Select the test statistic.

Since the test involves the population mean, and the sample size is large, we use the test statistic
𝑥̅ − 𝜇0
𝑍= 𝑠
√𝑛

Step 4: Formulate the decision rule.

The alternative hypothesis is 𝜇 ≠ 330. Therefore, we have a two- tailed test, and we divide 𝛼 equally
into two. That is, the critical values leave an area of 0.005 to the right and to the left, and we need ±𝑧0.005.
 Critical region, z, two-tailed test, ∝ = 0.01

Using the z – table in Appendix B, we have 𝑧0.005 = 2.575 . Hence, we shall reject 𝐻0 𝑖𝑓 𝑍 > 2.575 𝑜𝑟 𝑍 <
−2.575.

Step 5: Compute the value of the test statistic.

Based from the given, the sample mean is 𝑥̅ = 325 and the sample size is n = 50. The sample standard
deviation is s = 20. Also, the hypothesized value of the mean is 𝜇0 = 330. Substituting these values to the test
statistic gives
𝑥̅ − 𝜇0
𝑍= 𝑠
√𝑛
325− 330
𝑍= 20 ≈ −1.77
√50

Step 6: Make a decision.

Since the computed value of the test statistic is neither less than – 2.575 nor greater than 2.575, we do not reject
𝐻0 . There is insufficient evidence to say that the mean volume of drink dispensed is significantly different from
330mL.
Small Sample Test Statistic for Testing a Population Mean (when 𝝈 is unknown)

When testing the null hypothesis 𝐻0 : 𝜇 = 𝜇0 where the sample size n is small and σ is unknown, the test
statistic is
𝑥̅ − 𝜇0
𝑇= 𝑠
√𝑛

where 𝑥̅ = sample mean

n = sample size

𝜇0 = hypothesized value of the population mean; and

s = sample standard deviation

Here, the test statistic T has a student’s t-distribution with n-1 degrees of freedom when 𝐻0 is true.

For example, #1

1. Test at ∝ = 0.01 the null hypothesis 𝐻0 : 𝜇 = 1.75 against the alternative hypothesis 𝐻𝑎 : 𝜇 < 1.75 if a sample of
size n = 10 has a mean of 1.722 and a standard deviation of 0.0339. Assume that the population is approximately
normal.

Solution:

Step 1: State the null and alternative hypotheses.

𝐻0 : 𝜇 = 1.75

𝐻𝑎 : 𝜇 < 1.75

Step 2: State the level of significance.

The level of significance ∝ = 0.01

Step 3: Select the test statistic.

Since we are testing a population mean, the sample size n = 10 is small, and the population standard
deviation is not given

𝑥̅ − 𝜇0
𝑇= 𝑠
√𝑛

Step 4: Formulate the decision rule.

The alternative hypothesis contains the symbol <. Thus, the hypothesis test is left- tailed. Since the sample size n
= 10, the t-statistic has n-1 = 10-1= 9 degrees of freedom. Using the t-table in Appendix C, we have the critical value
−𝑡0.01,9 = −2.821.
 Critical region, t, left- tailed test, df = 9, 𝛼 = 0.01

Therefore, our decision rule involves rejecting 𝐻0 if T < -2.821.

Step 5: Compute the value of the test statistic.

All the relevant quantities in the test statistic are already provided:

𝑥̅ = 1.722, 𝜇0 = 1.75, 𝑠 = 0.0339, 𝑎𝑛𝑑 𝑛 = 10. Substituting these values to the formula for the test
statistic yields

𝑥̅ − 𝜇0
𝑇= 𝑠
√𝑛
1.722 − 1.75
𝑇=
0.0339
√10
 T ≈ -2.612

which is not less than -2.82.

Step 6: Make a decision rule.

Since the computed value of the test statistic from the sample is outside the critical region T < -2.821, we do not
reject Ho. We do not have enough evidence to say that the population mean is less than 1.75 at ∝ = 0.01.

For example, #2:

According to a report by Quartz in 2013, the Philippines is the number one coffee consumer in Asia. The typical
Filipino drinks an average of 0.608 cups of coffee per day, which is equivalent to an average of 4.256 cups per week
(using the conversion scale 1 week = 7days). Suppose that a sample of 12 senior citizens revealed they consumed the
following number of cups of coffee during the last week.

3, 3, 4, 4, 5, 7, 7, 5, 5, 3, 4, 4

At the 0.05 significance level, do the sample data suggest that there is a difference between the national average
and the sample mean from the senior citizens? Assume that the population is approximately normal.

Solution:

Step 1: State the null and alternative hypotheses.

Step 2: Select the level of significance.

Step 3: Select the test statistic.

Step 4: Formulate the decision rule.

Step 5: Compute the value of the test statistic.

Step 6: Make a decision.

Try it on your own!

INSTRUCTIONS: Analyze and solve the following. Show your solutions. Follow the 6-steps.

1. As input for a new inflation model, the average cost of a hypothetical basket of basic commodities in the Central
Luzon region was predicted by economists to be ₱146. The standard deviation of basket prices was assumed to be
₱95, a figure that has held fairly constant over the years. To check this prediction, a sample of 36 baskets
representing different parts of the region was checked in late July, and the average cost was ₱1,498. Let ∝ = 0.05.
Is the difference between the economists’ prediction and the sample mean statistically significant?

2. The shipping department manager of an e-commerce company claims that the average order shipped by the firm
weighs 10 kg. The general manager thinks this too large and decides to verify this claim by selecting random
sample of 100 orders. What can the manager conclude at 0.10 level of significance if the sample has a mean
weight of 9.1 kg with a standard deviation of 4 kg?

3. 𝐻0 : 𝜇 = 10

𝐻𝑎 : 𝜇 < 10

The sample mean is 8, the sample standard deviation is 3, and the sample size is 64. Use ∝ =
0.025.

4. 𝐻0 : 𝜇 = 1,375

𝐻𝑎 : 𝜇 > 1,375

The population follows a normal distribution with standard deviation 225, the sample mean is
1,575, and the sample size is 10. Use ∝ = 0.10

5. 𝐻0 : 𝜇 =0.25

𝐻𝑎 : 𝜇 ≠ 0.25

The population is approximately normal, the sample mean is 0.3, the sample standard deviation is
0.1, and the sample size is 25. Use ∝ = 0.10
Points to Remember:

When performing a test of hypothesis for a single mean, the test statistic depends on three things:

1. Whether the population is normally distributed

2. Whether the population standard deviation is known
3. Whether the sample size is large ( 𝑛 ≥ 30)

The three cases covered are summarized in the following flowchart:

Is the population
normal?

Yes No

Is the population
standard deviation Is n 30 or more?
known?

Yes No Yes No

Use an appropriate
Use the z - Use the t- Use the z -
nonparametric
distribution distribution. distribution.
test.
Appendix B: Cumulative Probabilities for the Standard Normal Distribution
Appendix C. Critical Values of the t- distribution