1

CHAPTER THREE
HYPOTHESIS TESTING

Introduction

In Chapter IV, Estimation, we used the information obtained in a simple random sample to construct
a confidence interval estimate of the unknown value of a population parameter. In this chapter,
hypothesis testing, we start with an assumed value of a population parameter: then we shall use
sample evidence to decide wither the assumed value is unreasonable and should be rejected or
whether it should be accepted.

The assumptions we make about the values of population parameters are called hypotheses. Sample
evidence is used to test the reasonableness of hypotheses; hence, the statistical inferences made in this
chapter are referred to as hypothesis testing. A procedure based on sample evidence and probability
theory to determine whether the hypothesis is a reasonable statement is called hypothesis testing.

In hypotheses testing we begin by making a tentative assumption about a population parameter.

This tentative assumption is called the null hypothesis, and is denoted by Ho - it is the assumption
we wish to test. We then define another hypothesis, called the alternative hypothesis, which is the
opposite of what is stated in the null hypothesis. This alternative hypothesis specifies all possible
values of the population parameter that are not specified in the null hypothesis, and in denoted by
Ha. The hypothesis testing procedure involves using data from a sample to test the two competing
statements indicated by Ho and Ha. Ho and Ha are mutually exclusive and collectively exhaustive.

In the process of hypothesis testing, the null hypothesis is initially assumed to be true. The data are
gathered and examined to determine whether the evidence is strong enough away from the null
hypothesis to reject it when the researcher in testing an industry standard or a widely accepted
values, the standard or accepted value is assumed to be true in the null hypothesis. Null in this sense
means that nothing is new, or there in no new value or standard. The burden is then placed on the
researcher to demonstrate through gathered data that the null hypothesis is false.

Ha, Hi = research hypothesis a statement that in accepted if the sample data provide enough evidence
that the Ho is false.

The situation encountered in hypothesis testing is similar to the one encountered in a criminal trial.
In a criminal trial the assumption is that the defendant is innocent. Thus, the null hypothesis is one of
innocence.
The opposite of the null hypothesis is the alternative hypothesis that the defendant is guilty. Thus,
the hypothesis far a criminal trial would be written

Ho: The defendant is innocent

Ha: The defendant is guilty
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To test these competing statements, or hypotheses, a trial is held. The testimony and evidence
obtained during the trial provide the sample information. If the sample information is not
inconsistent with the assumption of innocence, the null hypothesis that the defendant is innocent can
not be rejected. However, if the sample information is inconsistent with the assumption of innocence,
the null hypothesis will be rejected. In this case, action will be taken based upon the alternative
hypothesis that the defendant is guilty.

Example

1. The manager of a hotel has stated that the mean guest bill for a weekend is Birr 400 or less. A
member of the hotel’s accounting staff has 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.

Required: State the null and alternative hypotheses

Solution:

Ho: μ  Birr 400

Ha:   Birr 400

2. Production workers at XY Company have been trained in their jobs by using two different training
programs. The company training director would like to know whether there is a difference in mean
productivity for workers trained in the two programs.
Required: Develop the null and alternative hypotheses.
Solution
Ho: 1 = 2 or 1 - 2 = 0
Ha: 1  2 1 - 2  0

3. The manager at a drugstore claims that the company’s employees are honest. However, there have
been many shortages from the cash register lately.

Required: Specify the null and alternative hypothesis

Solution:
Ho: Employees are honest
Ha: Employees are dishonest

“In many situations, the choice of Ho and Ha is not obvious; in such cases, judgment on the part of
the user is needed to select the proper farm of Ho and Ha. However, the equality part of the
expression (either =, or ) always appears in the null hypothesis.
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Type I and Type II Errors
There are four possible outcomes of any hypothesis test, two of which are correct and two of which
are incorrect. The incorrect ones are called type I and Type II errors.

Type I Error
In hypothesis testing sample evidence is used to test the null hypothesis Ho. Occasionally the sample
data gathered in research process lead to a decision to reject a null hypothesis when actually it is true.
A type I error is committed when a true null hypothesis is rejected. In short, rejecting a true Ho is
called Type I error. The possibility of committing a Type I error is represented by Alpha (), or the
level of significance. Alpha is some times referred to as the amount of risk taken in an experiment.
Alpha represents the proportion of the area of the curve occupied by the rejection region. The most
commonly used values of  are 0.001, 0.01, 0.05 and 0.10. The larger the area of the rejection region,
the greater is the risk of committing Type I error.

Type II Error
A Type II error is committed by failing to reject a false null hypothesis. That is to say that, accepting a
null hypothesis when it is false is called a Type II error. The probability of committing a Type II error
is represented by beta ().

Alpha () is determined before the experiment, however, Beta () is computed using alpha, the
hypothesized parameter, and various theoretical alternatives to the null hypothesis.

(Null Hypothesis)
State of Nature
Decision Ho True Ho False
Accept Ho Correct Decision Type II Error
Reject Ho Type I Error Correct Decision

There is a trade off between alpha and beta (Type I and Type II errors). The probability of making
one type of error can be reduced only if we are willing to increase the probability of making the other
type of error. However, this does not mean that 1; rather it means that the smaller  is the larger
will be , and the larger  in the smaller  will be.

One – Tailed Vs Two – Tailed Tests

These are three possible null hypotheses along with their corresponding alternative hypotheses.

(1) Ho:  (2) Ho:  (3) Ho: 

Ha:  Ha:  Ha: 

  

Leads to two – tailed test leads to a right – tailed test Leads to a left tests
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Two – Tailed test
A two – tailed test of a hypothesis will reject the null hypothesis if the sample statistic is significantly
higher than or lower than a hypothesized population parameter. Thus, in a two – tailed test there are
two rejection regions. A two tailed is appropriate when the null hypothesis is equal to some specified
value (e.g. Ho:   ) and the alternative hypothesis is different from (not equal to) some specified
value (e.g. Ha:  . The dividing point between the region where the null hypothesis is rejected and
accepted is called critical value.

One Tailed test

A one tailed test is one in which the alternative hypothesis is directional; unlike a two – tailed test
which does not specify direction.
One – tailed test can be:

 A right – tailed / upper – tailed test.

 A left – tailed / lower – tailed test.

Aright – tailed test will reject the null hypothesis if the sample statistic is significantly higher than
the hypothesized population parameter.

A left – tailed test will reject the null hypothesis if the sample statistic is significantly lower than the
hypothesized population parameter.

STEPS IN HYPOTHESIS TESTING

A summary of the steps that can be applied to any hypothesis test are:

1. Determine the null and alternative hypotheses.

E.g. Ho:   
Ha:   

2. Select the test statistic that will be used to decide whether or not to reject the null hypothesis
E.g. Z – distribution, t – distribution, F- dist, x2 – distribution

3. Select the level of significance to determine the critical values and develop the rejection rule that
indicates the values of the test statistic that will lead to the rejection of Ho.
E.g.  = 0.05 Z025 = 1.96  Reject Ho if /Sample Z/  1.96

4. Collect the sample data, and compute the value the test statistic. A test statistic is a random
variable whose value is used to determine whether we reject the null hypothesis.
E.g. Sample Z=2.0

5. Compare the value of the test statistic to the critical value(s) and make the decision (either reject
Ho or accept HO /do not reject).
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HYPOTHESIS TEST ABOUT A POPULATION MEAN: Population - Normal, Standard
Deviation - Known

In hypothesis testing if the population in normal and standard deviation is known, we use Z-Value to
test the hypothesis; regardless of the sample size, n. It is also applicable when n  30 regardless of the
pop distribution

Example:

1. Matador-Addis Tyre Share Company claims that its tires have a mean life of 35,000 miles. A random
sample of 16 of these tires is tested if the sample mean in 33,000 miles. Assume that the population
standard deviation is 3000 miles and the lives of tires are approximately normally distributed. Test
the share company’s claim using a 5% level of significance.

Solution
1. Ho:  = 35,000 miles 2. Z – distribution, two tailed test
Ha:  ≠ 35,000 miles
3.  = 0.05 4. X = 33,000 miles
/2 = 0.025  = 3,000 miles
Z0.025 = ± 1.96 n = 16 tires
Reject Ho if /Sample Z/ > 1.96 Sample Z =?
33,000  35,000
Z 33,000    2.67
3,000
16
5. Reject Ho because /-2.67/ > 1.96

Alternative Methods of Testing Hypotheses

Two other methods of testing hypotheses are the critical value method and the probability (p-value)
method. All three methods of testing lead to the same conclusion with regard to rejection or failure to
reject the null hypothesis. Each of these other two methods is explained below.

Critical Value Method

One alternative method of testing hypotheses is the critical value method. In the preceding example,
the null hypothesis was rejected, because the computed Z value did fall in the rejection region. What
mean life of tyres would it take to cause the calculated z value to fall into the rejection region? The
critical value method determines the critical mean value required for z to be in the rejection region
and uses it to test the hypothesis.

x x
Similar to that of the first method, the critical value method uses the formula Z  or Z 
 
n n
depending on the knowledge of the population standard deviation. However, instead of a calculated
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z, a critical X value, X c , is determined. The critical value of Z c is inserted into the formula, along
with μ and σ. Thus,
X 
Zc  c .

n

Substituting values from the preceding example gives

X  35,000
 1.96  c Or
3,000
16
3,000
X c  35,000  1.96 =35,000 ± 750. Therefore, X c =35,750 or 34,250.
16

With the critical value method, most of the computational work is done ahead of time. In this case,
before the sample means are computed, it is known that a sample mean value of less than 34,250
miles but greater 35,750 than miles must be attained in order to reject the population mean. Because
the sample mean for this problem is 33,000 miles, we reject the null hypothesis. This method is
particularly attractive in industrial settings where standards can be set ahead of time and then quality
control technicians can gather data and compare actual measurements of products to specifications.

The probability (p-value) Method

A third way to make decisions in hypothesis testing problems is by using the probability (p-value)
method. In this method, in stead of comparing the computed statistic (z value) with a table value to
determine whether the value falls into the rejection region, we determine a probability for the
computed value and compare that probability to the level of significance (alpha).

For example, in the mean life of Matador-Addis Tyre case, the computed value of z was -2.67. The Z
table lists the probability of a value this large or larger (this small or smaller) occurring by chance as
0.00379 (0.5 - 0.49621). As this probability is smaller than α/2, the null hypothesis is rejected.

In order to reject the null hypothesis with the probability method, the probability of the
computed value must be less than α for a one tailed test or less than α/2 for a two tailed
test.
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2. A Teachers’ union is on strike for higher wages. The union claims that the mean salary for teachers
is at most Birr 8,400 per year. The legislator does not want to reject the union’s claim, however,
unless the evidence is very strong against if. Assume that salaries follow a normal distribution and
the population standard deviation is known to be Birr 3000. A random sample of 64 teachers is
obtained, and the sample mean is Birr, 9,400. Test if the state legislator accepts the unions’ claim or
not at 1% significance level.
Solution:
1. Ho:  ≤ Birr 8,400 2. Z – distribution, Right – tailed test
Ha:   Birr 8,400
3.  = 0.01
Z = Z0.01 = 2.33
Reject Ho if sample Z  + 2.33
4. n = 64
X = Birr 9,400
 = Birr 3,000
Sample Z =?
9,400  8,400
Z 9, 400   2.67
3,000
64
5. Reject Ho because + 2.67  2.33

3. A fertilizer company claims that the use of its product will result in a yield of at least 35 quintals of
wheat per hectare, on average, Application at the fertilizer to a randomly selected 36 sample hectares
resulted in a yield of 34quintals per hectare. Assume the population standard deviation is 5 quintals
and yields per hectare are normally distributed. Test the company’s claim at 1% level of significance.
Solution
1. Ho:  ≥ 35 quintals
Ha:   35 quintals
2. Z – distribution, left – tailed test
3.  = 0.01
Z= Z0.01 = 2.33
 Reject Ho if sample Z  -2.33
4. X = 34 quintals
n = 36
 = 5 quintals
Sample Z =?
34  35
Z 34   1.20
5
36
5. Do not reject H0, because -1.20 > -2.33

4. A survey of college graduates showed that the average yearly cash income for these graduates in at
least Birr 12,000. In Addis where you live this average does not seem possible, so you decide to test
this claim. You randomly select 48 graduates who are marking. The sample average income for these
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working graduates is Birr 11,400 with a standard deviation of Birr 2,280. Is there enough evidence
from this sample data to reject the national claim for your area as being too high? Use  = 0.10.
Solution
1. Ho :   Birr 12,000
Ha :   Birr 12,000
2. Z – distribution, Left tailed test
3.  = 0.1
Z = Z0.1 = -1.28
Reject Ho if sample Z < -1.28
4. X = Birr 11,400
S = Birr 2,280
n = 48
Sample Z =?
11,400  12,000
Z 11, 400   1.82
2,280
48
= -1.82
5. Reject Ho because –1.82 < -1.28
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HYPOTHESIS TESTING about: Population Normal,  Unknown, N Small

As explained in chapter 4, Interval Estimation, use of the t-distribution is appropriate when  is

unknown, the sample size is small (n30), and population is normally distributed. When we use the
t-distribution, it replaces Z as test statistic.
X  S
t SX 
SX n
Example:
1. A contractor assumes that construction workers are idle for 75 minutes or less per day. A random
sample of 25 construction workers was taken and the mean idle time was found to be 84 minutes per
day with a sample standard deviation of 20 minutes. Assume that the population is approximately
normally distributed, use a 5% level of significance to test the contractor’s assumption.
Solution
1. Ho:  ≤ 75 minutes
Ha:   75 minutes
2. t – distribution, Right – tailed test
3.  = 0.05
n = 25
 = n – 1 = 25 – 1 = 24
t, = t0.05,24 = 1.711
 Reject Ho if sample t  1.711
4. n = 25
X = 84 minutes
S = 20 minutes
Sample t =?
84  75
t 84   2.25
20
25
5. Reject Ho; because + 2.25  1.711. Workers are idle for more than 75 minutes per day.

2. A director of a secretarial school claims that its graduates can type at least 50 words per minute on
average. Suppose you want to hire some of these graduates if the director’s claim is true; and you
test the typing speed of 18 of the graduates and obtain a mean of 40 wards per minute with a sample
variance of 720. Assuming the typing speed for the graduates of the secretarial school is normally
distributed, test the director’s claim and decide whether to hire the graduates or not, using a 5% level
of significance.
Solution
1. Ho:   50 words
Ha:  50 words
2. t – distribution, Left – tailed test
3.  = 0.05
n = 18
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=n–1
= 18 – 1 = 17
t, = t0.05, 17 = 1.74
 Reject Ho if sample t  -1.74
4. X = 40 words
n = 18
s2 = 720
Sample t =?
40  50
t 40   1.58
720
18
5. Do not reject Ho because –1.58 > -1.74

HYPOTHESIS TESTING ABOUT A POPULATION PROPORTION (P)

A proportion is a value between 0 and 1 that expresses the part of the whole that possesses a given
characteristic.

The formula (methods) for proportions based on the central limit theorem make possible the testing
of hypotheses about the population proportion in a manner similar to that of the formula used to test
sample means. Similar to that of hypothesis testing about a population mean, hypothesis testing
about a population proportion has three terms.

1. Ho: P = y 2. Ho: P  y 3. Ho: P  y

Ha: P  y Ha: Py Ha: P y
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The first form is a two – tailed test, where as the second and third forms are one – tailed tests. The
specific form used depends up on the application of interest.

Hypothesis testing about a population proportion is based on the difference between the sample
proportion p and the hypothesized value P.

The central Limit Theorem applied to the sample proportions states that p values are normally
 pq 
distributed, with a mean of P and a standard deviation of  p   , when np and nq are greater
 n 
 
than or equal to 5. If np and nq are greater than or equal to 5, a Z - test is used to test hypothesis
about P.

p p
Z
p
Example:

1. A magazine claims that 25% of its readers are college students. A random sample of 200 readers is
taken. It is found that 42 of these readers are college students. Use a 10% level of significance and
test the magazine’s claim.
Solution
1. Ho: P = 0.25
Ha: P  0.25
2. Z – distribution; two tailed test
3.  = 0.1 /2 = 0.05
Z/2 = Z0.05 = 1.64
Reject Ho if /sample Z/  1.64
4. n = 200
x = 42
p = 0.21
Sample Z =?
0.21  0.25
Z 0.21   1.31
0.25 * 0.75
200
5. Do not reject Ho because / -1.31/ < 1.64

2. An Economist states that more than 35% of Addis’s labor force in unemployed. You don’t know if the
economist’s estimate is too high or too low. Thus, you want to test the economist’s claim using a 5%
level of significance. You obtain a random sample of 400 people in the labor force, of whom 128 are
unemployed. Would you reject the economist’s claim?
Solution
1. Ho: P ≤ 0.35
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Ha: P > 0.35
2. Z – distribution , right-tailed test
3.  = 0.05
Z 0.05 = 1.64
Reject Ho if sample Z > 1.64
4. n = 400
x = 128
p = 0.32
Sample Z =?
0.32  0.35
Z 0.32   1.26
0.35 * 0.65
400
5. Do not reject Ho because / -1.31/ < 1.64

3. A survey of the morning beverage market has shown that the primary breakfast beverage for 60% of
Ethiopian town and city dwellers is tea. Ethiopian coffee and Tea Authority believes that the figure is
higher for Addis. To test this idea, one of the employees of Ethiopian coffee and Tea Authority
contacts a random sample of 500 residents in Addis and asks which primary beverage they consumed
for breakfast that day. Suppose 325 replied that tea was the primary beverage. Using a 0.01 level of
significance, test the idea that the tea figure is higher for Addis.
Solution
1. Ho: P  0.60
Ha: P  0.60
2. Z – distribution, – Right tailed test
3.  = 0.01
Z0.01 = 2.33
 Reject Ho if sample Z  2.33
4. n = 500
X = 325
P = 0.45
Sample Z =?
0.65  0.60
Z 0.65   2.28
0.65 * 0.4
500
5. Do not reject Ho because 2.28 < 2.33

HYPOTHESIS TESTING INVOLVING TWO POPULATIONS

Hypothesis Testing About the Difference between Two Means

According to the central limit theorem, the difference in two sample means in normally distributed
for large sample sizes (n1, n2  30) and if the parent populations are normally distributed regardless of
the sample size the difference in two sample means is normally distributed.
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Large sample case

As is true is hypothesis testing about a population mean or population proportion, hypothesis testing
about the difference between two means has three forms. That is, the null hypothesis can take three
forms along with the corresponding alternative hypothesis.

1. Ho: 1-2 = 0 2. Ho: 1-2  0 3. Ho: 1-2  0

Ha: 1-2  0 Ha: 1-2  0 Ha: 1-2  0
The first form leads to a two-tailed test, while the later two lead to a one-tailed test.

Based on the central limit theorem, the mean of the sampling distribution sample means in the
difference between two population means; i.e.,  X 1  X 2  = 1-2; and the standard error
 12  22
is  X 1  X   .
2
n1 n2

For large sample sizes the sampling distribution of the difference between two sample means is
normally distributed with a Z – test statistic.

Z 1

X  X 2   1   2 
 12  22

n1 n2
And whenever n1 and n2  30, we can use S 12 and S 22 as estimates of  12 and  22 to compute Z if  12 and
 22 are unknown, and Z will be computed as

Z
X 1 
 X 2   1   2 
S 12 S 22

n1 n 2
In most of the hypothesis tests about two means, the hypothesized difference is zero.
Example:

1. Is there any difference between the average salary of a legal secretary and a medical secretary? In an
effort to answer that question a researcher takes a random sample of 33 legal secretaries across a
region, resulting in a sample average annual salary of Birr 20,000 with a standard deviation of Birr
1,550. The researcher then takes a random sample of 35 medical secretaries a class the region, which
yields an average annual salary of Birr 18,500 with a standard deviation of Birr 2,100. Use =0.01 to
test this question
Solution
1. Ho: 1-2 = 0
Ha: 1-2  0
2. Z – distribution , two tailed test
3.  = 0.01, /2 = 0.005
Z/ = Z0.005 = 2.57
 Reject Ho if /sample Z/  2.57
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4. Legal Secretary Medical Secretary
X 1 = Birr 20,000 X 2 = Birr 18,500
n1 = 33 n2 = 35
S1 = Birr 1,550 S2 = Birr 2,100
Sample Z =?

Z 1
 
X  X 2   1   2 
S 12 S 22

n1 n 2
20,000  18,500  0  3.36
Z X
1X2   Z 20,00018,500
1,550 2 2,100 2

33 35
5. Reject Ho; because /sample Z/ = 3.36  2.57. There is a difference in the average annual salary of
legal and medical secretary.

2. A firm is studying the delivery times for two raw material suppliers. The firm in basically satisfied
with supplier A and is prepared to stay with this supplier provided that the mean delivery time is the
same or less than that of supplier B. However if a firm finds that the mean delivery time from
supplier B is less than that of supplier A, it will begin making raw material purchases from supplier
B.
a. What are the null and alternative hypotheses for this situation?
b. Assume that independent samples show the following delivery time x is for the two suppliers.

Supplier A Supplier B
n1 = 50 n2 = 30
X 1 = 14 days X 2 = 12.5 days
S1 = 3 days S2 = 2 days

Using  = 0.05, what is your conclusion for the hypotheses from part (a)? What action do you
recommend in terms of supplier selection?
Solution
1. Ho: 1-2  0
Ha: 1-2  0
2. Z – distribution , Right - tailed test
3.  = 0.05
Z = Z0.05 = 1.64
Reject Ho if sample Z  1.64
4. Supplier A Supplier B
n1 = 50 n2 = 30
X 1 = 14 days X 2 = 12.5 days
S1 = 3 days S2 = 2 days
Sample Z =?
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14  12.5  0  2.68
Z X
1X2   Z 1412.5 
32 2 2

50 30

5. Reject Ho; because 2.68  1.64

This shows that the mean delivery time for supplier A is greater than supplier B. So the firm should
shift to supplier B.

3. In a wage discrimination case involving male and female employees, it is assumed that male
employees have a mean salary less than or equal to that of female employees. To justify this,
independent random samples of male and female employees were taken and the following result
obtained.
Male Employees Female Employees
n1 = 100 n2 = 100
X 1 = Birr 20,600 X 2 = Birr 19,700
S1 = 3,000 S2 = Birr 2,500

Test the hypothesis with  = 0.025. Does wage discrimination appear to exist in this case?

Solution
1. Ho: 1-2  0
Ha: 1-2  0
2. Z – distribution , Right - tailed test
3.  = 0.025
Z = Z0.025 = 1.96
Reject Ho if sample Z  1.96
4. Male employees Female employees
n1 = 100 n2 = 100
X 1 = Birr 20,600 X 2 = Birr 19,700
S1 = Birr 3,000 S2 = Birr 2,500
Sample Z =?
20,600  19,700  0  2.30
Z X
1X2   Z 20,60019,700
3,000 2 2,500 2

100 100
5. Reject Ho; because 2.30  1.96
Wage discrimination appears to exist

Small Sample Case

In testing of hypothesis for the difference between two means, given that the sample sizes taken are
small (n1, n2  30), we can use either Z or t – distribution as a test statistic assuming that the parent
populations are normally distributed.
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1. Population normal, and 1 and 2 known – Z distribution is used
2. Population normal, and 1 , and 2 unknown - t distribution is used

t – Distribution: used when population normal 1, and 2 unknown, and n1, and/or n2  30. The
unknown population standard deviations are approximated by sample standard deviations as:
S12 n1  1  S 22 n 2  1 1 1
X  SX   ; where df = n1 + n2 - 2
1X2 1X2
n1  n 2  2 n1 n 2
This approximation is based on the assumption that the two population standard deviations are
equal.

Once S X  X is known t is computed as: t 

X 1  X 2  1   2   
S12 n1  1  S 22 n 2  1 1
1 2
1

n1  n 2  2 n1 n 2
Or
S p2  PooledVari ance
X 
 X 2   1   2 
t S 12 n1  1  S 22 n 2  2
1
; Where
S p2 S p2 
 n1  n 2  2
n1 n2

If 1 and 2 are not equal, the sample standard error of the difference between two means and the
degrees of freedom are calculated as:
2
 S 12 S 22 
  
S 12 S 22  n1 n 2 
SX   ; V  df 
1X2 2 2
n1 n 2  S 12   S 22 
   
n  n 
 1   2 

n1  1 n2 1
Example:
1. A marketing research firm wishes to know if the mean number of his of TV viewing per week is the
same for teenage boys and teenage girls using a 5% level of significance. The unknown population
variances are assumed to be equal. The following data were obtained is an attempt to test the
equality of 1 and 2.
Teenage Boys Teenage Girls
n1 = 20 n2 = 12
X 1 = 24.5 hrs X 2 = 28.7 hrs
S 1 = 64 hrs
2
S22 = 71 hrs
Test the above hypothesis.
Solution
1. Ho: 1  2 or 1-2 = 0
Ha: 1  2 or 1-2  0
2. t – distribution , Two - tailed test
3.  = 0.05 v = n1 + n2 - 2
 17
/2 = 0.025 = 12 + 20 –2 = 30
t/2, V = t0.25, 30 = 2.042
Reject Ho if /sample t/  2.042
4. Teenage Boys Teenage Girls
n1 = 20 n2 = 12
X 1 = 24.5 hrs X 2 = 28.7 hrs
S21 = 64 hrs S22 = 71 hrs
Sample t =?

t X X  1

X  X 2  1   2 
= t 24.5 28.7 
24.5  28.7   0  1.41
S p2 S p2 6420  1  7112  1 1
1 2
1
 
n1 n 2 20  12  2 20 12

5. Do not Reject Ho; There is no significant difference

2. A time-and-motion study is conducted to test whether the mean length of time required to perform a
certain task is lesser for employees on the day shift than for employees on the night shift. The data
are as follows.
Day shift Night Shift
n1 = 10 n2 = 8
X 1 = 20 hrs X 2 = 29 hrs
S1 = 64 hrs
2
S22 = 50 hrs

Use a 1% level of significance to test the hypothesis. Assume the populations are approximately
normal, the population variances are equal, and the samples are independent.

Solution
1. Ho: 1 - 2  0
Ha: 1 - 2  0
2. t – distribution , Left - tailed test
3.  = 0.01 v = 10 +8-2 = 16
4. t, v = t0.01,16 = 2.583
Reject Ho if sample t  - 2.583
Sample t =?
t
20  29  0  2.49
6410  1  508  1 1 1

10  8  2 10 8

5. Do not reject Ho because –2.49 -2.58

The mean length of time required to perform a certain task for day-shift employees is greater than or
equal to for night shift employees.
 18
Hypothesis testing about the Difference between two population proportions (P1-P2)

Frequently we are interested in testing the hypothesis that the proportions of individuals who
possess a certain characteristic in population 1 is the same as that in population 2. E.g. The proportion
of defectives in lot A and Lot B

To test hypothesis about the difference between two population proportions, we obtain independent
random sample of n1 items from the first population and n2 items from the second; and calculate
X X
P1  1 and P2  2 . Once we obtain P1 and P2 , we use a test based on the standard normal
n1 n2
distribution.

In testing hypothesis about the difference in two population proportions, particular values of the
population proportions are not usually known or assumed; unlike hypothesis testing about
population proportion. Rather, the hypotheses are about the difference in the two population
proportions, (P1-P2). Hypothesis testing about the difference between two population proportions
has three forms:

1. Ho: P1-P2 = 0 2. Ho: P1-P2  0 3. Ho: P1-P2  0

Ha: P1-P2  0 Ha: P1-P2  0 Ha: P1-P2  0

The first form leads to a two-tailed test while the later two lead to a one-tailed test.

The central Limit Theorem applied to the difference between two population proportions states that
P1  P2 values are normally distributed, with a mean of P1-P2 a standard deviation of
P1 (1  P1 ) P2 (1  P2 )


, and Z  1

P  P2  P1  P2 
.
n1 n2 P1 q1 P2 q 2

n1 n2
However, since the standard error is unknown, it has to be estimated from the sample data. While
we may be tempted to use P1 and P2 as we did with the interval estimation procedure, in hypothesis
testing we often adjust it to a slightly different form. For the special case where the hypotheses
involve no difference between the population proportions (i.e. either Ho: P 1-P2 = 0 Ho: P1-P2  0, or
Ho: P1-P2  0) is modified to reflect the fact that when we assume Ho to be true at the equality, we are
assuming P1 = P2. When this occurs, we combine or pool the two sample proportions to provide one
n p  n2 p 2 X 1  X 2
estimate. This pooled estimator, denoted by P , is as P  1 1  , and the standard
n1  n 2 n1  n 2
1 1 
deviation  p  p is estimated by S p  p , which is calculated as S p  p  P(1  P)   =
 n1 n 2 
1 2 1 2 1 2
 19
1 1 
PQ   =
PQ P Q
 and Z is calculated as Z  1

P  P2  P1  P2 . And when P1 =P2, Z
 n1 n 2  n1 n2 1 1 
PQ  
 n1 n 2 

becomes Z 
P  P 
1 2
.
1 1 
PQ  
 n1 n 2 
Example:
1. In a sample of 400 products produced by machine I, 200 were defective, and in a sample of 400
products produced by machine II, 170 were defective. Using  = 0.05, test the hypothesis that the rate
of defect is the same for both machine 1 and machine 2.
Solution
1. Ho: P1-P2 = 0
Ha: P1-P2  0
2. Z – distribution, two – tailed test
3.  = 0.05,
/2 = 0.025
Z/2 = Z0.025 = 1.96
Reject Ho if /Sample Z/  1.96
4. Machine I Machine II
n1 = 400 n2 = 400
x1 = 200 x2 = 170
X  X 2 170  200
P 1   0.4625
n1  n 2 400  400

Sample Z 
P  P  P  P  =
1 2 1 2 0.5  0.425  0  2.13
1 1   1 1 
PQ   0.4625 * 0.5375  
 n1 n 2   400 400 
5. Reject Ho

2. To test the effectiveness of the approach and layout of two direct mail brochures, a marketing
manager of SELAM Inc mailed out 150 copies of each brochure and recorded the number of
responses penetrated by each. There were 30 responses generated by the first brochure and 15
generated by the second. Can the marketing manager conclude that the first brochure is more
effective? Use = 0.05.
Solution
1. Ho: P1-P2  0
Ha: P1-P2  0
2. Z – distribution, Right – tailed test
3.  = 0.05,
Z = Z0.05 = 1.64
Reject Ho if Sample Z  1.64
4. Brochure I Brochure II
 20
n1 = 150 n2= 150
x1 = 30 x2 = 15
X1  X 2 30  15
P   0.15
n1  n 2 150  150

Sample Z 
P  P   P  P  =
1 2 1 2 0.20  0.10  0  2.43
1 1   1 1 
PQ   0.15 * 0.85  
 n1 n 2   150 150 

5. Reject Ho. YES, the marketing manager can conclude that the first brochure is more effective than
the second.

3. Random samples of Video cassette Recorders assembled in ALEM assembly plant included 50
assembled during the first shift and 50 assembled during the second shift. Of the Video Cassette
Recorders assembled during the first shift 10 were defective; and 20 were defective from the second
shift. From the data, would the production foreman reject the hypothesis that the proportion of
defectives assembled by the first shift is greater than or equal to that for the second shift? Use a 0.05
level of significance.
Solution
1. Ho: P1-P2  0
Ha: P1-P2  0
2. Z distribution, Left-tailed test
3.  = 0.05,
Z = Z0.05 = 1.64
Reject Ho if Sample Z  1.64
4. Shift 1 Shift 2
n1 = 50 n2 = 50
x1 = 10 x2 = 20
X  X 2 10  20
P 1   0.30
n1  n 2 50  50

Sample Z 
P  P   P  P  =
1 2 1 2 0.20  0.40  0  2.18
1 1   1 1 
PQ   0.30 * 0.70  
 n1 n 2   50 50 
5. Reject Ho.
The proportion of defectives assembled by the second shift is greater than that for the first shift.

Solving For Type II Errors (Computation of Beta, β)

Determining the probability of committing a Type II error is more complex than finding the
probability of committing a Type I error. The probability of committing a Type I error either is given
in a problem or is stated by the researcher before proceeding with the study. A Type II error, β, varies
with the possible values of the alternative parameter.
 21

For example, suppose that a researcher is conducting a statistical test on the following hypothesis:
Ho:   12 oz
Ha:   12 oz

A Type II error can be committed only when the researcher fails to reject a false null hypothesis. In
these hypotheses, if the null hypothesis,   12 oz is false, what is the true value for the population
mean? Is the mean really 11.99 oz or 11.90 oz, or 11.50 oz or 10 oz? For each of possible values of the
population mean, the researcher can compute the probability of committing a Type II error. Often,
when the null hypothesis is false, the value of the alternative mean is unknown, so the researcher will
compute the probability of committing Type II errors for several possible values. How can the
probability of committing a Type II error be computed for a specific alternative value of mean?

Suppose that, in testing the hypotheses above, a sample of 60 cans of beverage yields a sample mean
of 11.985 0z, with a standard deviation of 0.10 oz. For α = 0.05 and a one-tailed test, the table Z value
is -1.64. The calculated Z value is

11.985  12.00
Z  1.16
0.10
60
From this calculated value of z, the researcher determines not to reject the null hypothesis. By not
rejecting the null hypothesis, the researcher either made a correct decision or committed a Type II
error. What is the probability of committing a Type II error in this problem if the population mean
actually is 11.99?

The first step in determining the probability of a Type II error is to calculate the critical value for the
mean, X . This value is used as a cutoff point for the acceptance region in testing the null hypothesis.
For any sample mean obtained that is less than X (or greater for an upper tail rejection region), the
null hypothesis is rejected. Any sample mean greater than X (or less for an upper tail rejection
region) causes the researcher to accept the null hypothesis. Solving for the critical value of the mean
gives
X 
Z
S
n
X  12.00
 1.64  ;
0.10
60

X = 11.979
From the above computation, we can learn that the null hypothesis will be rejected for a sample mean
vale of less than 11.979 oz. Assume that the alternative hypothesis is a = 11.99 oz. How often will the
researcher accept the  = 12 as true, when, in reality,  = 11.99 is true? If the null hypothesis is false,
the null hypothesis will be incorrectly accepted whenever  falls in the acceptance region, X  11.979
 22
oz. If  actually equals 11.99 oz, what is the probability of failing to reject  = 12 oz when 11.979 oz
is the critical value? The researcher calculates this probability by extending the critical value ( X =
11.979 oz) and finding the area to the right of 11.979.
X   11.979  11.99
Z   0.85
S 0.10
n 60

This value of Z yields an area of 0.3023. The probability of committing a Type II error is all the area to
the right of X = 11.979, or 0.3023+0.5000 = 0.8023. Hence, there is an 80.23% chance of committing a
Type II error if the alternative mean is 11.990z.

With two-tailed tests, both tails of the distribution contain rejection regions. If the null hypothesis is
false, obtaining a calculated statistic falling in the tails results in the correct decision: to reject the null
hypothesis. In this case, the probability of committing a Type II error exists only for the area between
the two critical values (the acceptance region). However, the right critical value is so far away from
the alternative mean that the area between the right critical value and the mean essentially is 0.5000.
Had there been any area past the upper critical value of Pc (0.46), it would have been subtracted from
0.5000, slightly reducing the value of 0.7454.

Exercises:
1. Suppose that you are conducting a two-tailed hypothesis test of proportions. The null hypothesis is
that the population proportion is 0.40. The alternative hypothesis is that the population proportion is
not 0.40. A random sample of 250 produces a sample proportion of 0.44. Using alpha of 0.05 and
assuming that the alternative population proportions really is 0.36, what is the probability of
committing a Type II error?

Solution:
For an alpha value of 0.05, the table Z value for α/2 is 1.96. Using 1.96, solve for the critical value of
the proportion.
pP
Z
Pq
n
p  0.40
 1.96 
0.4 * 0.6
250
P  0.40  0.06

The critical values are 0.34 on the lower end and 0.46 on the upper end. The alternative population
proportion is 0.36.

Solving the area between p = 0.34 and p = 0.36 yields

 23
0.34  0.36
Z  0.66
0.36 * 0.64
250

The area associated with Z= 0.66 is 0.2454. The probability of committing a Type II error is 0.5000 +
0.2454 = 0.7454.

2. Suppose that the null hypothesis is that the population mean is greater than or equal to 100. Suppose
further that a random sample of 48 items is taken and the sample standard deviation is 14. For each of
the following alpha values, compute the probability of committing a Type II error if the population
mean actually is 99.
a. α = 0.01
b. α = 0.05
c. α = 0.10
d. Based on the answers to (a), (b), and (c), what happens to the value of β as α gets larger?

Solution:
a. For an alpha value of 0.01, the table Z value for α is -2.33. Using -2.33, solve for the critical value of
the mean.
X 
Z c
s
n
X  100
 2.33 
14
48
X c  95.292

The critical value is 95.292 on the lower end. The alternative population mean is 99.

Solving the area between X c = 95.292 and μ = 99 yields

95.292  99
Z  1.83
14
48
The area associated with Z= -1.83 is 0.46638. The probability of committing a Type II error is 0.5000 +
0.46638 = 0.96638.

b. For an alpha value of 0.05, the table Z value for α is -1.64. Using -1.64, solve for the critical value of
the mean.
 24
Xc 
Z
s
n
X  100
 1.64 
14
48
X c  96.686

The critical value is 96.686 on the lower end. The alternative population mean is 99.

Solving the area between X c = 96.686 and μ = 99 yields

96.686  99
Z  1.14
14
48
The area associated with Z= -1.14 is 0.39251. The probability of committing a Type II error is 0.5000 +
0.39251 = 0.89251.

c. For an alpha value of 0.10, the table Z value for α is -1.28. Using -1.28, solve for the critical value of
the mean.
X 
Z c
s
n
X  100
 1.28 
14
48
X c  97.413

The critical value is 97.413 on the lower end. The alternative population mean is 99.

Solving the area between X c = 97.413 and μ = 99 yields

97.413  99
Z  0.79
14
48
The area associated with Z= -0.79 is 0.28524. The probability of committing a Type II error is 0.5000 +
0.28524 = 0.78524.

d. Based on the answers to (a), (b), and (c), the value of β gets smaller as α gets larger.
3. For exercise 2 above, use α = 0.05 a solve the probability of committing a Type II error for the
following possible true alternative means.
a.  a = 98.5
b.  a = 98
c.  a = 97
d.  a = 96
 25
e. What happens to the probability of committing a Type II error as the alternative value of
the mean gets farther from the null hypothesized value of 100?

Solution:
a. For an alpha value of 0.05, the table Z value for α is -1.64. Using -1.64, solve for the critical value of
the mean.
X 
Z c
s
n
X  100
 1.64 
14
48
X c  96.686

The critical value is 96.686 on the lower end. The alternative population mean is 98.5.

Solving the area between X c = 96.686 and μ = 98.5 yields

96.686  98.5
Z  90
14
48
The area associated with Z= -0.90 is 0.31594. The probability of committing a Type II error is 0.5000 +
0.31594 = 0.81594.

b. For an alpha value of 0.05, the table Z value for α is -1.64. Using -1.64, solve for the critical value of
the mean.
X 
Z c
s
n
X  100
 1.64 
14
48
X c  96.686

The critical value is 96.686 on the lower end. The alternative population mean is 98.

Solving the area between X c = 96.686 and μ = 98 yields

96.686  98
Z  0.65
14
48
The area associated with Z= -0.65 is 0.24215. The probability of committing a Type II error is 0.5000 +
0.24215 = 0.74215.
 26
c. For an alpha value of 0.05, the table Z value for α is -1.64. Using -1.64, solve for the critical value
of the mean.
X 
Z c
s
n
X  100
 1.64 
14
48
X c  96.686

The critical value is 96.686 on the lower end. The alternative population mean is 97.

Solving the area between X c = 96.686 and μ = 97 yields

96.686  97
Z  0.16
14
48
The area associated with Z= -0.16 is 0.06356. The probability of committing a Type II error is 0.5000 +
0.06356 = 0.56356.

d. For an alpha value of 0.05, the table Z value for α is -1.64. Using -1.64, solve for the critical value of
the mean.
X 
Z c
s
n
X  100
 1.64 
14
48
X c  96.686

The critical value is 96.686 on the lower end. The alternative population mean is 96.

Solving the area between X c = 96.686 and μ = 96 yields

96.686  96
Z  0.34
14
48
The area associated with Z= +0.34 is 0.13307. The probability of committing a Type II error is 0.5000 -
0.13307 = 0.36693.

e. The probability of committing a Type II error decreases as the alternative value of the mean gets
farther from the null hypothesized value (of 100).