CH 7 P Value

Statistics for Business and Economics (13e)
Statistics for
Slides by
Johnand Economics (13e)

Business
Loucks
Anderson, Sweeney, Williams, Camm, Cochran
St. Edward’s
© 2017 Cengage Learning
University
Slides by John Loucks

St. Edwards University
© 2017 Cengage Learning. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license distributed with a certain product or service or
otherwise on a password-protected website or school-approved learning management system for classroom use.
1
Chapter 9
Hypothesis Testing
• Developing Null and Alternative Hypotheses
• Type I and Type II Errors
• Population Mean: s Known
• Population Mean: s Unknown
• Population Proportion
2
Hypothesis Testing
• Hypothesis testing can be used to determine whether a statement about the
value of a population parameter should or should not be rejected.
• The null hypothesis, denoted by H0 , is a tentative assumption about a
population parameter.
• The alternative hypothesis, denoted by Ha, is the opposite of what is stated in
the null hypothesis.
• The hypothesis testing procedure uses data from a sample to test the two
competing statements indicated by H0 and Ha.
3
Developing Null and Alternative Hypotheses

• It is not always obvious how the null and alternative hypotheses should be
formulated.
• Care must be taken to structure the hypotheses appropriately so that the test
conclusion provides the information the researcher wants.
• The context of the situation is very important in determining how the
hypotheses should be stated.
• In some cases it is easier to identify the alternative hypothesis first. In other
cases the null is easier.
• Correct hypothesis formulation will take practice.
4

• Null Hypothesis
• is generally chosen as STATUS – QOU.
• It is an assertion that we hold as true unless we have sufficient statistical evidence to conclude
otherwise.
• Alternative Hypothesis:
• The one which is the claim to be tested.
• The one which researcher is trying to establish
• The one which new product/technology can do
5
Because the null and alternative hypotheses assert exactly opposite statements,
only one of them can be true.
6

• Alternative Hypothesis as a Research Hypothesis
• Many applications of hypothesis testing involve an attempt to gather

evidence in support of a research hypothesis.
• In such cases, it is often best to begin with the conclusion that the
researcher hopes to support and make it the alternative hypothesis.
• The conclusion that the research hypothesis is true is made
• if the sample data provides sufficient evidence to show that the null
hypothesis can be rejected.
7

• Example:
A new teaching method is developed that is believed to be better than
the current method.
The new teaching method is better.
• Null Hypothesis:
The new method is no better than the old method.
8
Example: Consider a particular automobile model that currently attains an

average fuel efficiency of 24 miles per gallon. A product research group
developed a new fuel injection system specifically designed to increase the
miles-per-gallon rating. To evaluate the new system, several will be
manufactured, installed in automobiles, and subjected to research-controlled
driving tests. Here the product research group is looking for evidence to
conclude that the new system increases the mean miles-per-gallon rating.
9

• Example:
A new sales force bonus plan is developed in an attempt to increase sales.
The new bonus plan will increase sales.
The new bonus plan will not increase sales.
10

• Example:
A new drug is developed with the goal of lowering blood pressure more
than the existing drug.
The new drug lowers blood pressure more than the existing drug.
The new drug does not lower blood pressure more than the existing
drug.
11

• Null Hypothesis as Testing Validity of A claim
• We might begin with a belief or assumption that a statement about the
value of a population parameter/claim is given the benefit of doubt and
is true.
• We then use a hypothesis test to challenge the assumption and determine
if there is statistical evidence to conclude that the assumption is incorrect.
• In these situations, it is helpful to develop the null hypothesis first.
12

• Null Hypothesis as an Assumption to be Challenged
• Example:
The label on a soft drink bottle states that it contains atleast 67.6 fluid
ounces.
The label is correct. m > 67.6 ounces.
The label is incorrect. m < 67.6 ounces.
13

• Null Hypothesis as Assumption to be Challenged
Example: on the basis of a sample of parts from a shipment just received, a quality
control inspector must decide whether to accept the shipment or to return the
shipment to the supplier because it does not meet specifications. Assume that
specifications for a particular part require a mean length of two inches per part. If
the mean length is greater or less than the two-inch standard, the parts will cause
quality problems in the assembly operation.
µ≠2
µ=2
14
Summary of Forms for Null and Alternative Hypotheses

• The equality part of the hypotheses always appears in the null hypothesis.
• In general, a hypothesis test about the value of a population mean  must
take one of the following three forms (where 0 is the hypothesized value of
the population mean).
≥ ≤ =
< > ≠
One-tailed One-tailed Two-tailed

(lower-tail) (upper-tail)
15
Null and Alternative Hypotheses

• Example: Metro EMS
A major west coast city provides one of the most comprehensive
emergency medical services in the world. Operating in a multiple hospital
system with approximately 20 mobile medical units, the service goal is to
respond to medical emergencies with a mean time of 12 minutes or less.
The director of medical services wants to formulate a hypothesis test that
could use a sample of emergency response times to determine whether or
not the service goal of 12 minutes or less is being achieved.
16
Null and Alternative Hypotheses

H0:  < 12 The emergency service is meeting the response goal;
no follow-up action is necessary.
Ha:  > 12 The emergency service is not meeting the response

goal; appropriate follow-up action is necessary.
where:  = mean response time for the population

of medical emergency requests
17
Rejecting Null/Alternative Hypotheses
Example: Consider a particular automobile model that currently attains an average fuel
efficiency of 24 miles per gallon. A product research group developed a new fuel injection
system specifically designed to increase the miles-per-gallon rating. To evaluate the new
system, several will be manufactured, installed in automobiles, and subjected to research-
controlled driving tests. Here the product research group is looking for evidence to conclude
that the new system increases the mean miles-per-gallon rating.
Null Hypothesis Cannot be Rejected Null Hypothesis Can be Rejected
The researchers cannot conclude that The researchers gain the statistical
µ> 24 the new fuel injection system is support necessary to state that the new
• Null Hypothesis: better. Perhaps more research and system increases the mean number of
subsequent testing should be miles per gallon. Production with the new
µ<=24 conducted. system should be considered.
18

Example: Consider the situation of a manufacturer of soft drinks who states that two-
liter soft drink containers are filled with an average of at least 67.6 fluid ounces. A
sample of two-liter containers will be selected, and the contents will be measured to
test the manufacturer’s claim.
The manufacturer’s claim cannot be the manufacturer’s claim is incorrect and

challenged. that the soft-drink containers are being
filled with a mean less than the claimed
• Null Hypothesis: 67.6 ounces. Appropriate action against
µ>=67.6 the manufacturer may be considered.
µ> 67.6
19
Example: on the basis of a sample of parts from a shipment just received, a quality
control inspector must decide whether to accept the shipment or to return the
shipment to the supplier because it does not meet specifications. Assume that
specifications for a particular part require a mean length of two inches per part. If
the mean length is greater or less than the two-inch standard, the parts will cause
quality problems in the assembly operation
The quality control inspector will the conclusion will be that the
have no reason to doubt that the parts do not meet specifications. In this
shipment meets specifications, and case, the quality control inspector will
• Null Hypothesis: the shipment will be accepted. have sufficient
µ evidence to return the shipment to the
supplier.
µ
This type of hypothesis test is employed in the quality
control procedure called lot-acceptance sampling.
20
Example: The manager of the Danvers-Hilton Resort Hotel stated that the mean guest
bill for a weekend is $600 or less. A member of the hotel’s accounting staff noticed
that the total charges for guest bills have been increasing in recent months. The
accountant will use a sample of weekend guest bills to test the manager’s claim.
µ
µ
21
Example: The manager of an automobile dealership is considering a new bonus plan
designed to increase sales volume. Currently, the mean sales volume is 14
automobiles per month. The manager wants to conduct a research study to see
whether the new bonus plan increases sales volume. To collect data on the plan, a
sample of sales personnel will be allowed to sell under the new bonus plan for a one-
month period.. Null Hypothesis Cannot be Rejected Null Hypothesis Can be Rejected
µ
µ
22

Example: A production line operation is designed to fill cartons with laundry
detergent to a mean weight of 32 ounces. A sample of cartons is periodically selected
and weighed to determine whether underfilling or overfilling is occurring. If the
sample data lead to a conclusion of underfilling or overfilling, the production line
will be shut down and adjusted to obtain proper filling.
µ
µ
23
Example: Because of high production-changeover time and costs, a director of
manufacturing must convince management that a proposed manufacturing method
reduces costs before the new method can be implemented. The current production
method operates with a mean cost of $220 per hour. A research study will measure
the cost of the new method over a sample production period.
µ
µ
24
Example: It is found that Web surfers will lose interest in a Web page if downloading
takes more than 12 seconds at 28K baud rate. If you wish to test the effectiveness of
a newly designed Web page regarding its download time, how will you set up the
null and alternative hypotheses?
µ
µ
25
Example: A researcher thinks that if knee surgery patients go to physical therapy

twice a week (instead of 3 times), their recovery period will be longer. Average
recovery times for knee surgery patients is 8.2 weeks.
µ>8.2
µ
26
Example: A researcher is studying the effects of radical exercise program on knee
surgery patients. There is a good chance the therapy will improve recovery time, but
there’s also the possibility it will make it worse. Average recovery times for knee
surgery patients is 8.2 weeks.
µ=8.2
µ
27
Type I and Type II Errors

Population Condition
H0 True H0 False
Conclusion (m < 12) (m > 12)
Accept H0 Correct
Type II Error
(Conclude m < 12) Conclusion
Reject H0 Correct
Type I Error Conclusion
(Conclude m > 12)
28
Type II Error
• A Type II error is accepting H0 when it is false.
• It is difficult to control for the probability of making a Type II error.
• Statisticians avoid the risk of making a Type II error by using “do not reject
H0” and not “accept H0”.
29
Type I Error
• Because hypothesis tests are based on sample data, we must allow
for the possibility of errors.
• A Type I error is rejecting H0 when it is true.
• The probability of making a Type I error when the null hypothesis is
true as an equality is called the level of significance.
• Applications of hypothesis testing that only control for the Type I error
are often called significance tests.
30
Type I and Type II Errors

Population Condition
Avoid Type I Error Avoid Type II Error

Conclusion
Accept all H0 Reject all H0
Conduct Type II Error Conduct Type I Error
Settle for optimal Probability for each type of error

31
p-Value Approach
• The p-value is the probability, computed using the test statistic, that
measures the support (or lack of support) provided by the sample for the
null hypothesis.
• If the p-value is less than or equal to the level of significance , the value of the
test statistic is in the rejection region.
• Reject H0 if the p-value <  .
32
p-Value Approach
• Assume that H0 is true.
• Now post sampling, you get a sample, where you get an extreme result, considering
truthiness of H0 .
• Now you wonder about probability of getting such a sample, under this assumption
of truthness.
• We call this probability p value
• P-value is the probability you see a result at least as extreme as the sample result
randomly if what you assumed (your null hypothesis) is true.
• It works a credibility score of H0 under this extreme sample found.
33
p-Value Approach
• Assume that H0 : coin is fair

• Assume that H1 : coin is not fair
• You keep getting HHHHHHHHHHHHHHHHHHHHHHHHHHHH each time you
roll a dice.
• Probability of getting this is very low(<.05) if H0 : coin is fair is true
• We say: Reject H0
34
p-Value Approach
• Assume that H0 : vaccine does not work

• Assume that H1 : vaccine works
• You get a sample where a control group given vaccine had ten patients less,
as compared to another control group.
• Probability of getting this is very low if H0 : vaccine does not work, is true.
• We say: Reject H0
35
p-Value Approach
• Assume that ≥1000

• Assume that H1 : 1000
• You get a sample where sample mean You want to check whether its typical
or weird.
• Should we reject ? May commit type II error
• Should we not reject ? May commit type I error
• We check the Probability of sample mean, when is true with 1000?
• Need evidence of unfavorable event. Choose an interval to sync up with
probability concepts we have learnt
• Take is true with 1000, to give the maximum benefit of doubt. Nearest
number to unfavorable event
36
p-Value Approach
• We calculate p=P( < 999|µ=1000)

• If p=.26, it does feel it may be typical, we do not reject
• If p=0.05, it feels rare, we reject
37
p-Value Approach
• p-Value tests the credibility of H0 in the light of the extreme sample we found
• If the null was true, you want to see if your sample indication was typical, or
weird.
• If it's weird enough, you can pretty much assume that the null hypothesis can
be rejected.
38
p-Value Approach to One-Tailed Hypothesis Testing

• The p-value is the probability, computed using the test statistic, that
measures the support (or lack of support) provided by the sample for the
null hypothesis.
• If the p-value is less than or equal to the level of significance , the value of the
test statistic is in the rejection region.
• Reject H0 if the p-value <  .
• Do not Reject H0 if the p-value > .
39
Not rejecting H0 implies H0 is true?

α=.05, p=.06
• Reject H0
• Accept H0
• Which error?
• We say “Do not reject H0 “, do not say “Accept H0”
40
Not rejecting H0 does not mean H0 is true

α=.05, p=.06
But the credibility of H0 is only 6%, which is hardly proof that H0 is true. It may
very well be that H0 is false and by not rejecting it, we are committing a type II error.
For this reason, under these circumstances we should say “We cannot reject H0 at an
of 5%” rather than “We accept H0.”
41
Rejecting H0 at α=.05, what is the maximum probability of

Type I error?
• Since .05 is the maximum probability of rejecting H0

• we are willing to put up with up to 5% chance of committing a type I error
42
Rejecting H0 at α=.05, what is the probability of Type II

error?
43

error?
• α=0: Type I error never occurs, Type II error with probability 1
44

error?
• To decrease the probability of type II error we have to increase α .

• other things remaining the same, increasing the value of will decrease the
probability of type II error.
• Increasing α=0 to α=0.05
• Increasing α=0.05 to α=.1
45
Rejecting H0 at α=.05, Meaning of 1- α ?
46
Rejecting H0 at α=.05, Meaning of 1- α ?
• 95% is the minimum confidence level that we set in order to reject H0

• we want to be at least 95% confident that H0 is false before we reject it.
47
What α to choose ?
• a question of compromise between type I and type II error probabilities

• suppose we are testing the average tensile strength of a large batch of bolts produced by a
machine to see if it is above the minimum specified.
48
What α to choose ?
• type I error will result in rejecting a good batch of bolts and the cost
of the error is roughly equal to the cost of the batch of bolts.
• Type II error will result in accepting a bad batch of bolts and its cost can be
high or low depending on how the bolts are used.
• If the bolts are used to hold together a structure,
then the cost is high because defective bolts can result in the collapse of the
structure, causing great damage.
• In this case, we should strive to reduce the probability
of type II error more than that of type I error
49
What α to choose ?
• On the other hand, if the bolts are used to secure the lids on trash cans, then
the cost of type II error is not high
• we should strive to reduce the probability of type I error more than that of
type II error.
• In such cases where type I error is more costly, we keep a small value for ,
namely, 1%.
50
What α to choose ?
• there are cases where we are not able to determine which type of error is
• more costly.
• If the costs are roughly equal, or if we have not much knowledge about the
relative costs of the two types of errors, then we keep 5%.
• when the costs of both types of error are high, the best policy is
to have a large sample and a low , such as 1%.
51
Lower-Tailed Test About a Population Mean: s Known

• p-Value Approach
Sampling
a = .10 Distribution of
𝑥 − 𝜇0
𝑧=
𝜎 /√𝑛
p-value
= .0721
p-Value < a ,
so reject H0. z
z= za = 0
-1.46 -1.28
52
Upper-Tailed Test About a Population Mean: s Known

Sampling
Distribution of a = .04
𝑥 − 𝜇0
𝑧=
𝜎 /√𝑛
p-Value (p-Value < a ,
 .011 so reject H0.)
z
0 za = z=
1.75 2.29
53
Critical Value Approach to One-Tailed Hypothesis Testing

• The test statistic z has a standard normal probability distribution.
• We can use the standard normal probability distribution table to find the z-
value with an area of a in the lower (or upper) tail of the distribution.
• The value of the test statistic that established the boundary of the rejection
region is called the critical value for the test.
• The rejection rule is:
• Lower tail: Reject H if z < -z
0 
• Upper tail: Reject H if z > z
0 
54
Lower-Tailed Test About a Population Mean: s Known

• Critical Value Approach
Sampling
Distribution of
𝑥 − 𝜇0
𝑧=
Reject H0 𝜎 /√𝑛
a 1
Do Not Reject H0
z
-za = -1.28 0
55
Upper-Tailed Test About a Population Mean: s Known

Sampling
Distribution of
𝑥 − 𝜇0
𝑧=
𝜎 /√𝑛 Reject H0
= .05
Do Not Reject H0
z
0 za = 1.645
56
Steps of Hypothesis Testing

Step 1. Develop the null and alternative hypotheses.
Step 2. Specify the level of significance .
Step 3. Collect the sample data and compute the value of the test statistic.
p-Value Approach
Step 4. Use the value of the test statistic to compute the p-value.
Step 5. Reject H0 if p-value < a.
57
Steps of Hypothesis Testing

Critical Value Approach
Step 4. Use the level of significance a to determine the critical value and the
rejection rule.
Step 5. Use the value of the test statistic and the rejection rule to determine
whether to reject H0.
58
One-Tailed Tests About a Population Mean: s Known

• Example: Metro EMS
The response times for a random sample of 40 medical emergencies were
tabulated. The sample mean is 13.25 minutes. The population standard
deviation is believed to be 3.2 minutes.
The EMS director wants to perform a hypothesis test, with a .05 level of
significance, to determine whether the service goal of 12 minutes or less is
being achieved.
59

• p -Value and Critical Value Approaches
1. Develop the hypotheses. H0:  < 12

Ha:  > 12
2. Specify the level of significance. a = .05
3. Compute the value of the test statistic.
= 2.47
60

• p –Value Approach
4. Compute the p –value.

For z = 2.47, cumulative probability = .9932.
p-value = 1 - .9932 = .0068
5. Determine whether to reject H0.

Because p-value = .0068 < a = .05, we reject H0.
There is sufficient statistical evidence to infer that Metro EMS is not
meeting the response goal of 12 minutes.
61

Sampling
Distribution of
a = .05
𝑥 − 𝜇0
𝑧=
𝜎 /√𝑛
p-value (p-Value < a,
 so reject H0.)
z
0 za = z=
1.645 2.47
62

4. Determine the critical value and rejection rule.

For a = .05, z.05 = 1.645
Reject H0 if z > 1.645
Because 2.47 > 1.645, we reject H0.
There is sufficient statistical evidence to infer that Metro
EMS is not meeting the response goal of 12 minutes.
63
p-Value Approach to Two-Tailed Hypothesis Testing

• Compute the p-value using the following three steps:
1. Compute the value of the test statistic z.
2. If z is in the upper tail (z > 0), compute the probability that z is greater
than or equal to the value of the test statistic. If z is in the lower tail
(z < 0), compute the probability that z is less than or equal to the value
of the test statistic.
3. Double the tail area obtained in step 2 to obtain the p-value.
• The rejection rule: Reject H0 if the p-value <  .
64
Critical Value Approach to Two-Tailed Hypothesis Testing

• The critical values will occur in both the lower and upper tails of the standard
normal curve.
• Use the standard normal probability distribution table to find z/2 (the z-value
with an area of a/2 in the upper tail of the distribution).
• The rejection rule is: Reject H0 if z < -z/2 or z > z/2.
65
Two-Tailed Tests About a Population Mean: s Known

• Example: Glow Toothpaste
The production line for Glow toothpaste is designed to fill tubes with a
mean weight of 6 oz. Periodically, a sample of 30 tubes will be selected in
order to check the filling process.
Quality assurance procedures call for the continuation of the filling
process if the sample results are consistent with the assumption that the
mean filling weight for the population of toothpaste tubes is 6 oz.; otherwise
the process will be adjusted.
66

• Example: Glow Toothpaste
Assume that a sample of 30 toothpaste tubes provides a sample mean of
6.1 oz. The population standard deviation is believed to be 0.2 oz.
Perform a hypothesis test, at the .03 level of significance, to help
determine whether the filling process should continue operating or be
stopped and corrected.
67

• p –Value and Critical Value Approaches
1. Determine the hypotheses. =

≠

= 2.74
68

For z = 2.74, cumulative probability = .9969
p-value = 2(1 - .9969) = .0062

Because p-value = .0062 < a = .03, we reject H0.
There is sufficient statistical evidence to infer that the alternative hypothesis

is true (i.e. the mean filling weight is not 6 ounces).
69

1/2 1/2
p-value p-value
= .0031 = .0031
a/2 = a/2 =
.015 .015
z
z = -2.74 0 z = 2.74
-za/2 = -2.17 za/2 = 2.17
70


For a/2 = .03/2 = .015, z.015 = 2.17
Reject H0 if z < -2.17 or z > 2.17

There is sufficient statistical evidence to infer that the alternative
hypothesis is true (i.e. the mean filling weight is not 6 ounces).
71

Sampling
Distribution of
𝑥 − 𝜇0
𝑧=
𝜎 /√𝑛
Reject H0 Reject H0
a/2 = .015 a/2 = .015
Do Not Reject H0
z
-2.17 0 2.17
72
Confidence Interval Approach to

Two-Tailed Tests About a Population Mean
• Select a simple random sample from the population and use the value of
the sample meanto develop the confidence interval for the population
mean . (Confidence intervals are covered in Chapter 8.)
• If the confidence interval contains the hypothesized value 0, do not
reject H0. Otherwise, reject H0. (Actually, H0 should be rejected if 0
happens to be equal to one of the end points of the confidence
interval.)
73
Confidence Interval Approach to

Two-Tailed Tests About a Population Mean
• The 97% confidence interval for  is
𝜎
𝑥 ± 𝑧𝛼 / 2 =6.1 ± 2.17 ( .2 √ 30 )=6.1± .07924
√𝑛
or 6.02076 to 6.17924
• Because the hypothesized value for the population mean, 0 = 6, is not in
this interval, the hypothesis-testing conclusion is that the null hypothesis,
H0:  = 6, can be rejected.
74
Tests About a Population Mean: s Unknown

• Test Statistic: 𝑥 − 𝜇0
𝑡=
𝑠 / √𝑛
• This test statistic has a t distribution with n - 1 degrees of freedom.
75
Tests About a Population Mean: s Unknown

• Rejection Rule: p -Value Approach
Reject H0 if p –value < a
• Rejection Rule: Critical Value Approach
H0:  > 0 Reject H0 if t < -t
H0:  < 0 Reject H0 if t > t
H0:  = 0 Reject H0 if t < - t/2 or t > t/2
76
p -Values and the t Distribution

• The format of the t distribution table provided in most statistics textbooks does
not have sufficient detail to determine the exact p-value for a hypothesis test.
• However, we can still use the t distribution table to identify a range for the p-
value.
• An advantage of computer software packages is that the computer output will
provide the p-value for the t distribution.
77
Example: Highway Patrol

• One-Tailed Test About a Population Mean: s Unknown
A State Highway Patrol periodically samples vehicle speeds at various
locations on a particular roadway. The sample of vehicle speeds is used to
test the hypothesis H0: m < 65.
The locations where H0 is rejected are deemed the best locations for radar
traps. At Location F, a sample of 64 vehicles shows a mean speed of 66.2 mph
with a standard deviation of 4.2 mph. Use a = .05 to test the hypothesis.
78
One-Tailed Test About a Population Mean: s Unknown

1. Determine the hypotheses. H0:  < 65

Ha: m > 65
= 2.286
79

For t = 2.286, the p-value must be less than .025
(for t = 1.998) and greater than .01 (for t = 2.387).
.01 < p–value < .025

Because p-value < a = .05, we reject H0.
We are at least 95% confident that the mean speed of vehicles at
Location F is greater than 65 mph.
80

For a = .05 and d.f. = 64 – 1 = 63, t.05 = 1.669
Reject H0 if t > 1.669
We are at least 95% confident that the mean speed of vehicles at
Location F is greater than 65 mph. Location F is a good candidate
for a radar trap.
81
Reject H0
()
Do Not Reject H0 p-value (p-Value < a ,

< .025 so reject H0.)
t
0 ta = t=
1.669 2.286
82
A Summary of Forms for Null and Alternative Hypotheses

About a Population Proportion
• The equality part of the hypotheses always appears in the null hypothesis.
• In general, a hypothesis test about the value of a population proportion p
must take one of the following three forms (where p0 is the hypothesized
value of the population proportion).
≥ ≤ =
< > ≠
One-tailed One-tailed Two-tailed

(lower tail) (upper tail)
83
Tests About a Population Proportion

𝑝 −𝑝 0
• Test Statistic: 𝑧 =
𝜎𝑝
where: 𝜎 𝑝=
assuming np > 5 and n(1 – p) > 5

√ 𝑝 0 ( 1− 𝑝 0 )
𝑛
84
Tests About a Population Proportion

• Rejection Rule: p –Value Approach
Reject H0 if p –value < a
• Rejection Rule: Critical Value Approach

H0: p < p0 Reject H0 if z > z
H0: p > p0 Reject H0 if z < -z
H0 : p = p 0 Reject H0 if z < -z/2 or z > z/2
85
Two-Tailed Test About a Population Proportion

• Example: National Safety Council (NSC)
For a Christmas and New Year’s week, the National Safety Council
estimated that 500 people would be killed and 25,000 injured on the nation’s
roads. The NSC claimed that 50% of the accidents would be caused by drunk
driving.
A sample of 120 accidents showed that 67 were caused by drunk driving.
Use these data to test the NSC’s claim with a = .05.
86

1. Determine the hypotheses. =

= .045644
= 1.28
87

4. Compute the p -value.
For z = 1.28, cumulative probability = .8997
p-value = 2(1 - .8997) = .2006

Because p-value = .2006 > a = .05,
we cannot reject H0.
88

4. Determine the critical values and rejection rule.
For a/2 = .05/2 = .025, z.025 = 1.96
Reject H0 if z < -1.96 or z > 1.96

Because 1.278 > -1.96 and < 1.96,
we cannot reject H0.
89
End of Chapter 9
90

CH 7 P Value

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

CH 7 P Value

Uploaded by

Copyright:

Available Formats

Statistics for Business and Economics (13e)

Johnand Economics (13e)

Slides by John Loucks

Developing Null and Alternative Hypotheses

Developing Null and Alternative Hypotheses

Developing Null and Alternative Hypotheses

Developing Null and Alternative Hypotheses

• Many applications of hypothesis testing involve an attempt to gather

Developing Null and Alternative Hypotheses

Example: Consider a particular automobile model that currently attains an

Developing Null and Alternative Hypotheses

Developing Null and Alternative Hypotheses

Developing Null and Alternative Hypotheses

• In these situations, it is helpful to develop the null hypothesis first.

Developing Null and Alternative Hypotheses

Developing Null and Alternative Hypotheses

Summary of Forms for Null and Alternative Hypotheses

One-tailed One-tailed Two-tailed

Null and Alternative Hypotheses

Null and Alternative Hypotheses

Ha:  > 12 The emergency service is not meeting the response

where:  = mean response time for the population

Rejecting Null/Alternative Hypotheses

The manufacturer’s claim cannot be the manufacturer’s claim is incorrect and

Rejecting Null/Alternative Hypotheses

Example: A researcher thinks that if knee surgery patients go to physical therapy

Null Hypothesis Cannot be Rejected Null Hypothesis Can be Rejected

Type I and Type II Errors

Type I and Type II Errors

Avoid Type I Error Avoid Type II Error

Accept all H0 Reject all H0

Conduct Type II Error Conduct Type I Error

Settle for optimal Probability for each type of error

• Assume that H0 : coin is fair

• Assume that H0 : vaccine does not work

• Assume that ≥1000

• We calculate p=P( < 999|µ=1000)

p-Value Approach to One-Tailed Hypothesis Testing

Not rejecting H0 implies H0 is true?

• We say “Do not reject H0 “, do not say “Accept H0”

Not rejecting H0 does not mean H0 is true

Rejecting H0 at α=.05, what is the maximum probability of

• Since .05 is the maximum probability of rejecting H0

Rejecting H0 at α=.05, what is the probability of Type II

Rejecting H0 at α=.05, what is the probability of Type II

• α=0: Type I error never occurs, Type II error with probability 1

Rejecting H0 at α=.05, what is the probability of Type II

• To decrease the probability of type II error we have to increase α .

Rejecting H0 at α=.05, Meaning of 1- α ?

Rejecting H0 at α=.05, Meaning of 1- α ?

• 95% is the minimum confidence level that we set in order to reject H0

• a question of compromise between type I and type II error probabilities

Lower-Tailed Test About a Population Mean: s Known

Upper-Tailed Test About a Population Mean: s Known

Critical Value Approach to One-Tailed Hypothesis Testing

Lower-Tailed Test About a Population Mean: s Known

Upper-Tailed Test About a Population Mean: s Known

Steps of Hypothesis Testing

Steps of Hypothesis Testing

One-Tailed Tests About a Population Mean: s Known

One-Tailed Tests About a Population Mean: s Known

1. Develop the hypotheses. H0:  < 12

2. Specify the level of significance. a = .05