Statistics for

Business and Economics

8th Edition

Chapter 9

Hypothesis Testing:
Single Population

Ch. 9-1
9.1
What is a Hypothesis?
 A hypothesis is a claim
(assumption) about a
population parameter:
 population mean
Example: The mean monthly cell phone bill
of this city is μ = $42
 population proportion
Example: The proportion of adults in this
city with cell phones is p = .68
Ch. 9-2
 The Null Hypothesis, H0
 States the assumption (numerical) to be
tested
Example: The average number of TV sets in
U.S. Homes is equal to three ( H0 : μ  3 )
A hypothesis about a parameter that will be maintained unless
there is strong evidence against the null hypothesis.
 Is always about a population parameter, not about a
sample statistic

H0 : μ  3 H0 : X  3
Ch. 9-3
 The Null Hypothesis, H0
(continued)
 Begin with the assumption that the null
hypothesis is true
 Similar to the notion of innocent until

proven guilty
 Always contains “=” , “≤” or “” sign
 May or may not be rejected
 A null hypothesis is a claim (or statement) about
a population parameter that is assumed to be true
until it is declared false.

Ch. 9-4
 The Alternative Hypothesis, H1
 Is the opposite of the null hypothesis
 e.g., The average number of TV sets in U.S. homes is

not equal to 3 ( H1: μ ≠ 3 )

 Never contains the “=” , “≤” or “” sign. Might contain
, ,  sign.
 May or may not be supported
 If we reject the null hypothesis, then the second
hypothesis, named the “alternative hypothesis” will be
accepted.
 Is generally the hypothesis that the researcher is trying to
support
 An alternative hypothesis is a claim about a population
parameter that will be true if the null hypothesis is false.
Ch. 9-5
 Hypothesis Testing Process

Claim: the
population
mean age is 50.
(Null Hypothesis:
Population
H0: μ = 50 )
Now select a
random sample
Is X 20 likely if μ = 50?
If not likely, Suppose
the sample
REJECT mean age Sample
Null Hypothesis is 20: X = 20
Ch. 9-6
 Four Possible Outcomes for a Test of
Hypothesis (Two Types of Errors)

Actual Situation
The person is The person is
not guilty guilty
The person is Correct
Type 2 error
Court's not guilty Decision
Decision The person is Correct
Type 1 error
guilty Decision
Table: Four possible outcomes for a court case.
 Two Types of Errors
Definition
A Type I error occurs when a true null hypothesis is
rejected. The value of α represents the probability of
committing this type of error; that is,
α = P(H0 is rejected | H0 is true)
The value of α represents the significance level of the test.
A Type II error occurs when a false null hypotheses is not
rejected. The value of β represents the probability of
committing a Type II error; that is,
β = P (H0 is not rejected | H0 is false)
The value of 1 – β is called the power of the test. It
represents the probability of not making a Type II error.
 Level of Significance, 

 Defines the unlikely values of the sample

statistic if the null hypothesis is true
 Defines rejection region of the sampling
distribution
 Is designated by  , (level of significance)
 Typical values are .01, .05, or .10
 Is selected by the researcher at the beginning
 Provides the critical value(s) of the test
Ch. 9-9
 Level of Significance
and the Rejection Region
Level of significance =  Represents
critical value
H0: μ = 3 /2 /2
Rejection
H1: μ ≠ 3 Two-tail test 0 region is
shaded
H0: μ ≤ 3  Definition
H1: μ > 3 A two-tailed test
has rejection regions
Upper-tail test 0 in both tails, a left-
tailed test has the
H0: μ ≥ 3 rejection region in
 the left tail, and a
right-tailed test has
H1: μ < 3 the rejection region
in the right tail of the
Lower-tail test 0 distribution curve.

Ch. 9-10
Signs in H0 and H1 and Tails of a Test
Hypothesis Tests for the Mean

Hypothesis
Tests for 

 Known  Unknown

Ch. 9-12
 9.2 Test of Hypothesis
for the Mean (σ Known)
 Convert sample result ( x ) to a z value
Hypothesis
Tests for 

σ Known σ Unknown

Consider the test

H0 : μ  μ0 The decision rule is:
H1 : μ  μ0 x  μ0
Reject H 0 if z   zα
σ
(Assume the population is n
normal)
Ch. 9-13
 Decision Rule
H0: μ = μ0
x  μ0
Reject H 0 if z   zα
σ H1: μ > μ0
n

Alternate rule:
Reject H 0 if x  μ 0  Z α σ / n 

Do not reject H0 Reject H0

Z 0 zα
x μ0 μ0  z α
σ
n

Critical value x c Ch. 9-14

 Example 1: Upper-Tail Z Test
for Mean ( Known)
A phone industry manager thinks that
customer monthly cell phone bill have
increased, and now average over $52 per
month. The company wishes to test this
claim. (Assume  = 10 is known)

Form hypothesis test:

H0: μ ≤ 52 the average is not over $52 per month
H1: μ > 52 the average is greater than $52 per month
(i.e., sufficient evidence exists to support the
manager’s claim)

Ch. 9-15
 Example: Find Rejection Region
(continued)
 Suppose that  = .10 is chosen for this test

Find the rejection region: Reject H0

= .10

Do not reject H0 Reject H0

0 1.28

x  μ0
Reject H 0 if z   1.28
σ/ n
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 9-16
 Example: Sample Results
(continued)

Obtain sample and compute the test statistic

Suppose a sample is taken with the following

results: n = 64, x = 53.1 ( = 10 was assumed known)
 Using the sample results,
x  μ0 53.1  52
z    0.88
σ 10
n 64
Ch. 9-17
 Example: Decision
(continued)
Reach a decision and interpret the result:
Reject H0

= .10

Do not reject H0 Reject H0

0
1.28
z = 0.88
Do not reject H0 since z = 0.88 < 1.28
(So, Accept H0)
i.e.: there is not sufficient evidence that the
mean bill is over $52,
OR,Education,
Copyright © 2010 Pearson the average bill
Inc. Publishing as is not
Prentice Hall over $52 per month Ch. 9-18
 One-Tail Tests

 In many cases, the alternative hypothesis

focuses on one particular direction

H0: μ ≤ 3 This is an upper-tail test since the

alternative hypothesis is focused on
H1: μ > 3 the upper tail above the mean of 3

This is a lower-tail test since the

H0: μ ≥ 3
alternative hypothesis is focused on
the lower tail below the mean of 3
H1: μ < 3
Ch. 9-19
 Upper-Tail Tests

 There is only one H0: μ ≤ 3

critical value, since H1: μ > 3
the rejection area is
in only one tail 

Do not reject H0 Reject H0

Z 0 zα
x μ

Critical value x c

Ch. 9-20
 Lower-Tail Tests
H0: μ ≥ 3
 There is only one
critical value, since
H1: μ < 3
the rejection area is
in only one tail 

Reject H0 Do not reject H0

-z 0 Z

μ x
Critical value x c

Ch. 9-21
 Two-Tail Tests
 In some settings, the
H0: μ = 3
alternative hypothesis does
not specify a unique direction H1 : μ 
3

/2 /2
 There are two
critical values, x
3
defining the two
Reject H0 Do not reject H0 Reject H0
regions of
-z/2 0 +z/2 z
rejection
Lower Upper
critical value critical value
Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Ch. 9-22
 Example 9.1 (B.p-336)
Evaluating a new production process
(hypothesis test: Upper tail Z test)

 The production manager of Northern Windows Inc. has

asked you to evaluate a proposed new procedure for
producing its Regal line of double-hung windows. The
present process has a mean production of 80 units per
hour with a population standard deviation of σ = 8. the
manager indicates that she does not want to change a
new procedure unless there is strong evidence that the
mean production level is higher with the new process.
 Assume n=25 and α=0.05. Also assume that the sample
mean was 83.
 What decision would you recommend based on
hypothesis testing?

Chap 10-23
 Example 9.2 Lower Tail Test
 The production manager of Twin Forks ball bearing has
asked your assistance in evaluating a modified ball
bearing production process. When the process is
operating properly the process produces ball bearings
whose weights are normally distributed with a population
mean of 5 ounces and a population standard deviation of
0.1 ounce. The sample mean was 4.962 and n= 16.
 A new raw material supplier was used for a recent
production run, and the manager wants to know if that
change has resulted in lowering of the mean weight of
bearings.
 What will be your conclusion for a lower tail test?

Chap 10-24
 Example 9.3 Two tailed test
 The production manager of Circuits Unlimited has
asked for your assistance in analyzing a production
process. The process involves drilling holes whose
diameters are normally distributed with population
mean 2 inches and population standard deviation
0.06 inch. A random sample of nine measurements
had a sample mean of 1.95 inches.
 Use a significance level of 0.05 to determine if the
observed sample mean is unusual and suggests
that the machine should be adjusted.

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 10-25
 t Test of Hypothesis for the Mean
(σ Unknown)
 Convert sample result ( x ) to a t test statistic
Hypothesis
Tests for 

σ Known σ Unknown

Consider the test

The decision rule is:
H0 : μ  μ0
x  μ0
H1 : μ  μ0 Reject H0 if t   t n-1, α
s
(Assume the population is n
normal)
Chap 10-26
 t Test of Hypothesis for the Mean
(σ Unknown)
(continued)
 For a two-tailed test:
Consider the test
H0 : μ  μ0 (Assume the population is normal,
and the population variance is
H1 : μ  μ0 unknown)

The decision rule is:

x  μ0 x  μ0
Reject H0 if t    t n-1, α/2 or if t   t n-1, α/2
s s
n n

Chap 10-27
 Example 2: Two-Tail Test
( Unknown)

The average cost of a

hotel room in New York
is said to be $168 per
night. A random sample
of 25 hotels resulted in
x = $172.50 and H0: μ= 168
s = $15.40. Test at the H1: μ
 = 0.05 level. 168
(Assume the population distribution is normal)

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 10-28
 Example Solution:
Two-Tail Test

H0: μ= 168 /2=.025 /2=.025

H1: μ
 168
= 0.05 Reject H0 Do not reject H0 Reject H0
t n-1,α/2
-t n-1,α/2 0
 n = 25 -2.0639 2.0639
1.46
  is unknown, so x μ 172.50  168
t n 1    1.46
use a t statistic s 15.40
n 25
 Critical Value:

t24 , .025 = ± 2.0639 Do not reject H0: not sufficient evidence that
true mean cost is different than $168
Chap 10-29
 Tests of the Population Proportion

 Involves categorical variables

 Two possible outcomes
 “Success” (a certain characteristic is present)
 “Failure” (the characteristic is not present)
 Fraction or proportion of the population in the
“success” category is denoted by P
 Assume sample size is large

Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 10-30
 Proportions
(continued)
 Sample proportion in the success category is
denoted by p̂


ˆp  x  number of successes in sample
n sample size

 When nP(1 – P) > 9, p̂ can be approximated

by a normal distribution with mean and standard
deviation

μp̂  P P(1 P)
σ p̂ 
n
Chap 10-31
 Hypothesis Tests for Proportions

 The sampling
distribution of p̂is Hypothesis
approximately Tests for P
normal, so the test
statistic is a z value:
nP(1 – P) > 9 nP(1 – P) < 9

pˆ  P0 Not discussed
z in this chapter
P0 (1 P0 )
n
Chap 10-32
 Example 3: Z Test for Proportion

A marketing company
claims that it receives
8% responses from its
mailing. To test this
claim, a random sample
of 500 were surveyed
Check:
with 25 responses. Test
Our approximation for P is
at the  = .05 p̂ = 25/500 = .05
significance level.
nP(1 - P) = (500)(.05)(.95)
= 23.75 > 9 
Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 10-33
 Z Test for Proportion: Solution
Test Statistic:
H0: P = .08
pˆ  P0 .05  .08
H1: P  . z   2.47
P0 (1 P0 ) .08(1 .08)
08= .05
n 500
n = 500, p̂ = .05
Critical Values: ±1.96 Decision:
Reject Reject Reject H0 at  = .05
Conclusion:
.025 .025
There is sufficient
-1.96 0 1.96 z evidence to reject the
-2.47 company’s claim of 8%
response rate.
Chap 10-34
 Two Procedures

Two procedures to make tests of hypothesis

1. The p-value approach

2. The critical-value approach
 p-Value Approach to Testing
 p-value: Probability of obtaining a test
statistic more extreme ( ≤ or  ) than the
observed sample value given H0 is true
 Also called lowest level of significance
 Smallest value of  for which H0 can be rejected
 Decision rule: compare the p-value to 
 If p-value <  , reject H0
 If p-value   , do not reject H0
Statistics for Business and Economics, 6e © 2007 Pearson Education, Inc. Chap 10-36
 HYPOTHESIS TESTS ABOUT μ: σ
KNOWN

Definition
Assuming that the null hypothesis is true, the p-value can
be defined as the probability that a sample statistic (such
as the sample mean) is at least as far away from the
hypothesized value in the direction of the alternative
hypothesis as the one obtained from the sample data
under consideration.

Note that the p–value is the smallest significance level at

which the null hypothesis is rejected.
Figure 9.5 The p–value for a right-tailed
test.
Figure 9.6 The p–value for a two-tailed
test.
 Calculating the z Value for x

 When using the normal distribution, the value of z

for x for a test of hypothesis about μ is computed
as follows:
x  
z where  x 
x n

 The value of z calculated for x using this formula is

also called the observed value of z.

Prem Mann, Introductory Statistics, 7/E

Copyright © 2010 John Wiley & Sons. All right reserved
 Steps to Perform a Test of Hypothesis
Using the p–Value Approach

1. State the null and alternative hypothesis.

2. Select the distribution to use.
3. Calculate the p–value.
4. Make a decision.
 Example 9-1 (p–Value Approach)
At Canon Food Corporation, it used to take an average of 90 minutes
for new workers to learn a food processing job. Recently the
company installed a new food processing machine. The supervisor at
the company wants to find if the mean time taken by new workers to
learn the food processing procedure on this new machine is different
from 90 minutes.
A sample of 20 workers showed that it took, on average, 85 minutes
for them to learn the food processing procedure on the new machine.
It is known that the learning times for all new workers are normally
distributed with a population standard deviation of 7 minutes.

Find the p–value for the test that the mean learning time for the food
processing procedure on the new machine is different from 90
minutes. What will your conclusion be if α = .01?
 Example 9-1: Solution

 Step 1: H0: μ = 90 H1: μ ≠ 90

 Step 2: The population standard deviation σ is
known, the sample size is small (n < 30), but the
population distribution is normal. We will use the
normal distribution to find the p–value and make
the test.
 Example 9-1: Solution
 Step 3:
 7
x    1.56524758 min utes
n 20
x  85  90
z   3.19
x 1.56524758
see 3.19 from z table, we find .9993 so 1-.9993= 0.0007

p-value = 2(.0007) = .0014

Figure 9: The p-value for a two-tailed
test.
 Example 9-1: Solution
 Step 4: Because α = .01 is greater than the p-
value of .0014, we reject the null hypothesis at
this significance level.

Therefore, we conclude that the mean time for

learning the food processing procedure on the
new machine is different from 90 minutes.
 Example
The mayor of a large city claims that the average
net worth of families living in this city is at least
$300,000. A random sample of 25 families
selected from this city produced a mean net worth
of $288,000. Assume that the net worths of all
families in this city have an approximate normal
distribution with the population standard deviation
of $80,000. Using a 2.5% significance level,can
you conclude that the mayor’s claim is false?

47
Solution

Ch. 9-48
 Example
Grand Auto Corporation produces auto batteries.
The company claims that its top-of-the-line. Never
Die batteries are good, on average, for at least 65
months. A consumer protection agency tested 45
such batteries to check this claim. It found that the
mean life of these 45 batteries is 63.4 months,
and the standard deviation is 3 months. Find the
p-value for the test that the mean life of all such
batteries is less than 65 months. What will your
conclusion be if the significance level is 2.5%?

Ch. 9-49
Ch. 9-50