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Statistical Economics

Tutorial 3 : Hypothesis Testing

1) The mean monthly internet bill for Malaysia is RM32.79 per household. A sample of 50
households in a state showed a sample mean of RM30.63. Use a population deviation of
σ =RM 5.60.
n = 50
x̅ = 30.63
σ = 5.60

a. Formulate hypotheses for a test to determine whether the sample data support the
conclusion that the mean monthly internet bill in the state is less than the national
mean of RM32.79.
H0: µ ≥ 32.79
Ha: µ < 32.79
b. What is the value of the test statistic?
x̄ −μ
Z=
σ
√n
30.63−32.79
Z=
5.60
√50
≈ - 2.73
c. What is the p-value?
P (Z < -2.73) = 0.0032
d. At α =0.1, what is your conclusion?
P< 0.1
Reject H0
There is sufficient evidence to support that the alternative hypothesis is true.
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2) The Cola company reported that the mean per capital annual sales of its beverages in Zoalu was
423 bottles of 500ml servings. Suppose you are curious whether the consumption of the Cola
beverages is higher in Valu, the location of the Cola corporate headquarters. A sample of 36
individuals from Valu showed a sample mean annual consumption of 460.4 bottles of 500ml
servings with a standard deviation fo s = 101.9 ml. Using α =0.05 , do the sample results support
the conclusion that mean annual consumption of Cola beverage products is higher in location
Valu?
n = 36
x̅ = 460.4
s = 101.9
α = 0.05
H0: µ ≤ 423
Ha: µ > 423
x̄−μ
t=
s
√n
460.4−423
t=
101.9
√ 36
≈ 2.20
df = n-1
= 35
P-value approach
For t = 2.20, the p value must be less than 0.025
0.01< P < 0.025
P < 0.05
Reject H0
Critical value approach
t0.05 = 1.690
Because 2.20 > 1.690
Reject H0
At least 95% confidence that the sample results support the conclusion that mean annual
consumption of Cola beverage products is higher in location Valu.
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3) Many investors and financial analysts believe the Googi Stock Exchange (GSE) provides a good
barometer of the overall stock market. On January 31, 2012, 9 of the 30 stocks making up the
GSE increased in price. On the basis of this fact, a financial analyst claims we can assume that
30% of the stocks traded on the GSE went up the same day.

a. Formulate null and alternative hypotheses to test the analyst’s claim.

H0: p = 0.30
Ha: p ≠ 0.30

b. A sample of 50 stocks trade on the GSE that day showed that 24 went up. What is your
point estimate of the population proportion of stocks that went up?
x
p̅ =
n
24
p̅ =
50
= 0.48

c. Conduct your hypothesis test using α =0.1, what is your conclusion?

σ p̅ =
√ n
p 0 ( 1− p 0 )

¿
√0.30 ( 1−0.30 )
50
= 0.0648

p̅ − p0
z=
σ p̅
0.48−0.30
z=
0.0648
≈ 2.78

p-value = 2 (1 – 0.9973)

= 0.0054

P < 0.1
Reject H0