Hypothesis Testing - I

Hypothesis
testing - I
Session objectives
Hypothesis Testing - 1
To learn the Basic Concepts of Testing of Hypothesis

 Formulation of null and alternate hypothesis
Testing for Mean

 𝜎 known
 One – tail & Two – tail
 𝜎 Unknown
 Proportion (One Population)

Developing Null and Alternative Hypotheses
Null Hypothesis as an Assumption to be Challenged
• We might begin with a belief or assumption that
a statement about the value of a population
parameter is true.
• We then using 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.
 Alternative Hypothesis as a Research Hypothesis
• Example:
A new teaching method is developed that is
believed to be better than the current method.
• Null Hypothesis:
The new method is no better than the old method.
• Alternative Hypothesis:
The new teaching method is better.
where 0 is the hypothesized value of

the population mean

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

the population mean

• Example:
A new drug is developed with the goal of lowering
blood pressure more than the existing drug.
The new drug does not lower blood pressure more
than the existing drug.
The new drug lowers blood pressure more than
the existing drug.
the population mean
Summary of Forms for Null and Alternative
Hypotheses about a Population Mean
 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)
Null and Alternative Hypotheses formulation
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.
Null and Alternative Hypotheses
The emergency service is meeting the response goal; no

H0: 
follow-up action is necessary.
The emergency service is not meeting the response

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

of medical emergency requests
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
the Type I error are often called significance tests.
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”.
Population Condition
Type I and Type II Errors
H0 True H0 False
Conclusion (m < 12) (m > 12)
Accept H0 Correct
Type II Error
(Conclude m < 12) Decision
Reject H0 Correct
Type I Error Decision
(Conclude m > 12)
LEVEL OF SIGNIFICANCE (
the level of significance is the probability of making a type i error when the null
hypothesis is true as an equality eg =0.05; =0.10 etc
Q 5 Pg 553
Duke energy reported that the cost of electricity for an efficient home in a particular
neighborhood of Cincinnati, Ohio, was $104 per month (home Energy Report, duke energy,
March 2012). a researcher believes that the cost of electricity for a comparable neighborhood
in Chicago, Illinois, is higher. a sample of homes in this Chicago neighborhood will be taken
and the sample mean monthly cost of electricity will be used to test the following null and
alternative hypotheses.
1. Develop null and alternate hypothesis to test the assumption that cost of electricity for a
comparable neighborhood in Chicago, Illinois, is higher.
2. Assume the sample data led to rejection of the null hypothesis. what would be your
conclusion about the cost of electricity in the Chicago neighborhood?
3. What is the type I error in this situation? what are the consequences of making this error?
4. What is the type II error in this situation? what are the consequences of making this error?
Solution
1.
2. Conclude that the population mean monthly cost of electricity in the Chicago neighborhood is greater
than $104 and hence higher than in the comparable neighborhood in Cincinnati.
3. The Type I error is rejecting H0 when it is true. This error occurs if the researcher concludes that the
population mean monthly cost of electricity is greater than $104 in the Chicago neighborhood when the
population mean cost is actually less than or equal to $104.
4. The Type II error is accepting H0 when it is false. This error occurs if the researcher concludes that the
population mean monthly cost for the Chicago neighborhood is less than or equal to $104 when it is not.
𝜎 𝐾𝑛𝑜𝑤𝑛
One –tailed test
SUMMARY OF HYPOTHESIS TESTS ABOUT A
POPULATION MEAN: KNOWN CASE
Q15 Pg 567
Individuals filing federal income tax returns prior to March 31 received an average refund
of $1056. consider the population of “last-minute” filers who mail their tax return during
the last five days of the income tax period (typically april 10 to april 15). A researcher
suggests that a reason individuals wait until the last five days is that on average these
individuals receive lower refunds than do early filers.
a) develop appropriate hypotheses such that rejection of will support the researcher’s
contention.
b) For a sample of 400 individuals who filed a tax return between april 10 and 15, the
sample mean refund was $910. based on prior experience a population standard
deviation of = $1600 may be assumed. At = .05, what is your conclusion? test using the
critical value approach
c) Repeat the preceding hypothesis what is the p-value?
Solution Q15 Pg 567
Q16 Pg 567
In a study entitled How undergraduate Students use credit cards, it was reported
that undergraduate students have a mean credit card balance of $3173. this
figure was an all-time high and had increased 44% over the previous five years.
assume that a current study is being conducted to determine if it can be
concluded that the mean credit card balance for undergraduate students has
continued to increase compared to the original report. based on previous
studies, use a population standard deviation s = $1000.
a) State the null and alternative hypotheses.
b) Using .05 level of significance, what is your conclusion? for a sample of 180
undergraduate students with a sample mean credit card balance of $3325?
c) What is the p-value?
Solution Q16 Pg 567
Q17 Pg 567
The mean hourly wage for employees in goods-producing industries is currently
$24.57 (bureau of labor Statistics website, april, 12, 2012). Suppose we take a
sample of employees from the manufacturing industry to see if the mean hourly
wage differs from the reported mean of $24.57 for the goods-producing industries.
a) State the null and alternative hypotheses we should use to test whether the
population mean hourly wage in the manufacturing industry differs from the
population mean hourly wage in the goods-producing industries.
b) Suppose a sample of 101 employees from the manufacturing industry showed a
sample mean of $23.89 per hour. assume a population standard deviation of
$2.40 per hour and With a = .05 as the level of significance, what is your
conclusion? test using the critical value approach.
c) compute the p-value.
Z= = -2.847
Z= -2.847 reject Ho and conclude that sig difference
Z= -2.847 reject Ho and conclude that sig difference

𝜎 𝑈𝑛𝑘𝑛𝑜𝑤𝑛
One –tailed test
SUMMARY OF HYPOTHESIS TESTS ABOUT A
POPULATION MEAN: UNKNOWN CASE
Pg 572
Solution
Pg 573
Solution
Pg 574
Solution
Test about a
population
proportion
Tests About a Population Proportion
 Test Statistic
where:
assuming np > 5 and n(1 – p) > 5

SUMMARY OF HYPOTHESIS TESTS
ABOUT A POPULATION PROPORTION
Pg 578
Solution

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Hypothesis

To learn the Basic Concepts of Testing of Hypothesis

Testing for Mean

 Proportion (One Population)

where 0 is the hypothesized value of

 Alternative Hypothesis as a Research Hypothesis

where 0 is the hypothesized value of

 Alternative Hypothesis as a Research Hypothesis

One-tailed One-tailed Two-tailed

The emergency service is meeting the response goal; no

The emergency service is not meeting the response

where:  = mean response time for the population

 A Type II error is accepting H0 when it is false.

Z= -2.847 reject Ho and conclude that sig difference

Z= -2.847 reject Ho and conclude that sig difference

assuming np > 5 and n(1 – p) > 5

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