HYPOTHESIS TESTS

ABOUT THE MEAN AND

PROPORTION

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Opening Example

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HYPOTHESIS TESTS: AN INTRODUCTION

Two Hypotheses
Rejection and Nonrejection Regions
Two Types of Errors
Tails of a Test

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Two Hypotheses
Definition
A null hypothesis is a claim (or statement) about a
population parameter that is assumed to be true until it is
declared false.

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Two Hypotheses
Definition
An alternative hypothesis is a claim about a population
parameter that will be declared true if the null hypothesis is
declared to be false.

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Rejection and Nonrejection Regions

Figure 9.1 Nonrejection and rejection regions for the court
case.

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Two Types of Errors

Table 9.1 Four Possible Outcomes for a Court Case

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Two Types of Errors

Definition
A Type I error occurs when a true null hypothesis is
rejected. The value of represents the probability of
committing this type of error; that is,
= P(H0 is rejected | H0 is true)
The value of represents the significance level of the test.

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Two Types of Errors

Definition
A Type II error occurs when a false null hypotheses is not
rejected. The value of represents the probability of
committing a Type II error; that is,
= P (H0 is not rejected | H0 is false)
The value of 1 is called the power of the test. It
represents the probability of not making a Type II error.

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Table 9.2 Four Possible Outcomes for a Test of

Hypothesis

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Tails of a Test
Definition
A two-tailed test has rejection regions in both tails, a lefttailed test has the rejection region in the left tail, and a
right-tailed test has the rejection region in the right tail of
the distribution curve.

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A Two-Tailed Test

According to the U.S. Bureau of Labor Statistics, people in

the United States who had a bachelors degree and were
employed earned an average of $1038 a week in 2010.
Suppose an economist wants to check whether this mean has
changed since 2010. The key word here is changed.
The mean weekly earning of employed Americans with a
bachelors degree has changed if it is either increased or
decreased since 2010. This is an example of a two tailed
test.

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A Two-Tailed Test

Let be the mean weekly earning of employed Americans

with a bachelors degree. The two possible decisions are
H0 : = $1038 (The mean weekly earning of employed
Americans with a bachelors degree has not changed
since 2010)
H1 : $1038 (The mean weekly earning of employed
Americans with a bachelors degree has changed since
2010)

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A Two-Tailed Test
Whether a test is twotailed or onetailed is determined
by the sign in the alternative hypothesis.
If the alternative hypothesis has a not equal to () sign,
it is a twotailed test.

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Figure 9.2 A two-tailed test.

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A Left-Tailed Test
Reconsider the example of the mean amount of soda in all
soft-drink cans produced by a company. The company claims
that these cans, on average, contain 12 ounces of soda.
However, if these cans contain less than the claimed amount
of soda, then the company can be accused of cheating.
Suppose a consumer agency wants to test whether the mean
amount of soda per can is less than 12 ounces. Note that the
key phrase this time is less than, which indicates a left-tailed
test.

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A Left-Tailed Test

Let be the mean amount of soda in all cans. The two

possible decisions are
H0 : = 12 ounces (The mean is equal to 12 ounces)
H1 : < 12 ounces (The mean is less than 12 ounces)

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A Left-Tailed Test
In this case, we can also write the null hypothesis as H0 :
12. This will not affect the result of the test as long as the
sign in H1 is less than (<).
When the alternative hypothesis has a less than (<) sign, the
test is always lefttailed.

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Figure 9.3 A left-tailed test.

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A Right-Tailed Test
According to www.city-data.com, the average price of
homes in West Orange, New Jersey, was $459,204 in 2009.
Suppose a real estate researcher wants to check whether
the current mean price of homes in this town is higher than
$459,204. The key phrase in this case is higher than, which
indicates a right-tailed test.

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A Right-Tailed Test

Let be the current mean price of homes in this town. The

two possible decisions are
H0 : = $459,204 (The current mean price of homes in
this town is not higher than $459,204)
H1 : > $459,204 (The current mean price of homes in
this town is higher than $459,204)

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A Right-Tailed Test
When the alternative hypothesis has a greater than (>) sign,
the test is always righttailed.

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Figure 9.4 A right-tailed test.

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Table 9.3 Signs in H0 and H1 and Tails of a Test

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Two Procedures
Two procedures to make tests of hypothesis
1. The p-value approach
2. The critical-value approach

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HYPOTHESIS TESTS ABOUT : KNOWN

Three Possible Cases
Case I. If the following three conditions are fulfilled:
1. The population standard deviation is known
2. The sample size is small (i.e., n < 30)
3. The population from which the sample is selected is
normally distributed.

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HYPOTHESIS TESTS ABOUT : KNOWN

Three Possible Cases
Case II. If the following two conditions are fulfilled:
1. The population standard deviation is known
2. The sample size is large (i.e., n 30)

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HYPOTHESIS TESTS ABOUT : KNOWN

Three Possible Cases
Case III. If the following three conditions are fulfilled:
1. The population standard deviation is known
2. The sample size is small (i.e., n < 30)
3. The population from which the sample is selected is
not normally distributed (or its distribution is
unknown).

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HYPOTHESIS TESTS ABOUT : KNOWN

Three Possible Cases

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HYPOTHESIS TESTS ABOUT : 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 pvalue is the smallest significance level at which the null
hypothesis is rejected.

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Figure 9.5 The pvalue for a right-tailed test.

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Figure 9.6 The pvalue for a two-tailed test.

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Calculating the z Value for x

When using the normal distribution, the value of z for x for a
test of hypothesis about is computed as follows:

where x
n

The value of z calculated for x using this formula is also called

the observed value of z.

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Steps to Perform a Test of Hypothesis Using the

pValue Approach
1.
2.
3.
4.

State the null and alternative hypothesis.

Select the distribution to use.
Calculate the pvalue.
Make a decision.

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Example 9-1
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 = .01?

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Example 9-1: Solution

Step 1: H0: = 90
H1: 90
Step 2: The population standard deviation 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.

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Example 9-1: Solution

Step 3:

7
x

1.56524758 min utes

n
20
x
85 90
z

3.19
x
1.56524758
p-value = 2(.0007) = .0014

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Figure 9-7 The p-value for a two-tailed test.

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Example 9-1: Solution

Step 4: Because = .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.

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Example 9-2
The management of Priority Health Club claims that its
members lose an average of 10 pounds or more within the
first month after joining the club. A consumer agency that
wanted to check this claim took a random sample of 36
members of this health club and found that they lost an
average of 9.2 pounds within the first month of membership
with a standard deviation of 2.4 pounds. Find the pvalue for
this test. What will your decision be if = .01? What if =
.05?

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Example 9-2: Solution

Step 1: H0: 10
H1: < 10
Step 2: The population standard deviation is known, the
sample size is large (n > 30). Due to the Central Limit
Theorem, we will use the normal distribution to find the p
value and perform the test.

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Example 9-2: Solution

Step 3:

2.4
.40
n
36
x 9.2 10
z

2.00
x
.40

p-value = .0228

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Figure 9-8 The p-value for a left-tailed test.

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Example 9-2: Solution

Step 4: Since = .01 is less than the p-value of .0228, we
do not reject the null hypothesis at this significance level.
Consequently, we conclude that the mean weight lost within
the first month of membership by the members of this club is
10 pounds or more.
Because = .05 is greater than the p-value of .0228, we
reject the null hypothesis at this significance level.
Therefore, we conclude that the mean weight lost within the
first month of membership by the members of this club is
less than 10 pounds.

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HYPOTHESIS TESTS ABOUT : KNOWN

Test Statistic
In tests of hypotheses about using the normal distribution,
the random variable

x
z
where
x

x
n

is called the test statistic. The test statistic can be defined

as a rule or criterion that is used to make the decision
whether or not to reject the null hypothesis.

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HYPOTHESIS TESTS ABOUT : KNOWN

Steps to Perform a Test of Hypothesis with the CriticalValue Approach
1.
2.
3.
4.
5.

State the null and alternative hypotheses.

Select the distribution to use.
Determine the rejection and nonrejection regions.
Calculate the value of the test statistic.
Make a decision.

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Example 9-3
The TIV Telephone Company provides long-distance
telephone service in an area. According to the companys
records, the average length of all long-distance calls placed
through this company in 2009 was 12.44 minutes. The
companys management wanted to check if the mean length
of the current long-distance calls is different from 12.44
minutes. A sample of 150 such calls placed through this
company produced a mean length of 13.71 minutes with a
standard deviation of 2.65 minutes. Using the 2%
significance level, can you conclude that the mean length of
all current long-distance calls is different from 12.44
minutes?

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Example 9-3: Solution

Step 1: H0 : = 12.44 H1 : 12.44
Step 2: The population standard deviation is known, and
the sample size is large (n > 30). Due to the Central Limit
Theorem, we will use the normal distribution to perform the
test.

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Example 9-3: Solution

Step 3: = .02
The sign in the alternative hypothesis indicates that the
test is two-tailed.
Area in each tail = / 2= .02 / 2 = .01.
The z values for the two critical points are -2.33 and 2.33.

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Figure 9.9

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Calculating the Value of the Test Statistic

When using the normal distribution, the value of the test
statistic z for x for a test of hypothesis about is computed
as follows:

where x
n

The value of z for x is also called the observed value of z.

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Example 9-3: Solution

Step 4:

2.65
.21637159
n
150
x 13.71 12.44
z

5.87
x
.21637159

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Example 9-3: Solution

Step 5: This value of z = 5.87 is greater than the critical
value of z = 2.33, and it falls in the rejection region in the
right tail in Figure 9.9. Hence, we reject H0 and conclude that
based on the sample information, it appears that the mean
length of all such calls is not equal to 12.44 minutes.

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Example 9-4
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 a normal distribution with the
population standard deviation of $80,000. Using the 2.5%
significance level, can you conclude that the mayors claim
is false?

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Example 9-4: Solution

Step 1: H0 : $300,000
H1 : < $300,000
Step 2: The population standard deviation is known, the
sample size is small (n < 30), but the population distribution is
normal. Consequently, we will use the normal distribution to
perform the test.

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Example 9-4: Solution

Step 3: = .025
The < sign in the alternative hypothesis indicates that the
test is left-tailed.
Area in the left tail = = .025.
The critical value of z is -1.96.

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Figure 9.10

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Example 9-4: Solution

Step 4:

80,000
$16,000
n
25
x 288,000 300,000
z

.75
x
16,000

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Example 9-4: Solution

Step 5: This value of z = -.75 is greater than the critical
value of z = -1.96, and it falls in the nonrejection region. As
a result, we fail to reject H0. Therefore, we can state that
based on the sample information, it appears that the mean
net worth of families in this city is not less than $300,000.

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Case Study 9-1 Average Student Debt for the Class of

2010

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HYPOTHESIS TESTS ABOUT : NOT KNOWN

Three Possible Cases
Case I. If the following three conditions are fulfilled:
1. The population standard deviation is not known
2. The sample size is small (i.e., n < 30)
3. The population from which the sample is selected is
normally distributed.

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HYPOTHESIS TESTS ABOUT : NOT KNOWN

Three Possible Cases
Case II. If the following two conditions are fulfilled:
1. The population standard deviation is not known
2. The sample size is large (i.e., n 30)

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HYPOTHESIS TESTS ABOUT : NOT KNOWN

Three Possible Cases
Case III. If the following three conditions are fulfilled:
1. The population standard deviation is not known
2. The sample size is small (i.e., n < 30)
3. The population from which the sample is selected is not
normally distributed (or its distribution is unknown).

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HYPOTHESIS TESTS ABOUT : NOT KNOWN

Three Possible Cases

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HYPOTHESIS TESTS ABOUT : NOT KNOWN

Three Possible Cases

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HYPOTHESIS TESTS ABOUT : NOT KNOWN

Test Statistic
The value of the test statistic t for the sample mean x is
computed as

x
t
sx

s
where s x
n

The value of t calculated for x by using this formula is also

called the observed value of t.

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Example 9-5
A psychologist claims that the mean age at which children
start walking is 12.5 months. Carol wanted to check if this
claim is true. She took a random sample of 18 children and
found that the mean age at which these children started
walking was 12.9 months with a standard deviation of .80
month. It is known that the ages at which all children start
walking are approximately normally distributed. Find the pvalue for the test that the mean age at which all children
start walking is different from 12.5 months. What will your
conclusion be if the significance level is 1%?

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Example 9-5: Solution

Step 1: H0 : = 12.5
H1 : 12.5
Step 2: The population standard deviation is not known,
the sample size is small (n < 30), and the population is
normally distributed. Consequently, we will use the t
distribution to find the p-value for the test.

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Example 9-5: Solution

Step 3: The sign in the alternative hypothesis indicates
that the test is two-tailed

s
.80
sx

.18856181
n
18
x 12.9 12.5
t

2.121
sx
.18856181
and df = n 1 = 18 1 = 17
.02 < p-value < .05

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Figure 9.11 The required p-value

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Example 9-5: Solution

Step 4: For any greater than .05, we will reject the null
hypothesis. For any less than .02, we will not reject the
null hypothesis. For our example, = .01, which is less
than the lower limit of the p-value ranges of .02. As a
result, we fail to reject H0 and conclude that the mean age
at which all children start walking is not different from 12.5
months.

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Example 9-6
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 the mean life of these 45 batteries to be 63.4
months with a standard deviation of 3 months. Find the pvalue for the test that mean life of all such batteries is less
than 65 months. What will your conclusion be if the
significance level is 2.5%?

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Example 9-6: Solution

Step 1: H0 : 65
H1 : < 65
Step 2: The population standard deviation is not known and
the sample size is large (n > 30). Consequently, we will use the
t distribution to find the p-value for the test.

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Example 9-6: Solution

Step 3: The < sign in the alternative hypothesis indicates
that the test is left-tailed

s
3
sx

.44721360
n
45
x
63.4 65
t

3.578
sx
.44721360
and df = n 1 = 45 1 = 44
p-value < .001

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Figure 9.12 The required p-value

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Example 9-7
Refer to Example 9-5. A psychologist claims that the mean
age at which children start walking is 12.5 months. Carol
wanted to check if this claim is true. She took a random
sample of 18 children and found that the mean age at which
these children started walking was 12.9 months with a
standard deviation of .80 month. Using the 1% significance
level, can you conclude that the mean age at which all
children start walking is different from 12.5 months? Assume
that the ages at which all children start walking have an
approximately normal distribution.

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Example 9-7: Solution

Step 1: H0 : = 12.5
H1 : 12.5
Step 2: The population standard deviation is not known,
the sample size is small (n < 30), and the population is
normally distributed. Consequently, we will use the t
distribution to perform the test.

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Example 9-7: Solution

Step 3: Significance level = .01. The sign in the
alternative hypothesis indicates that the test is two-tailed
and the rejection region lies in both tails.
Area in each tail = /2 = .01/2 = .005.
df = n 1 = 18 1 = 17.
The critical values for t for 17 df and .005 area in each tail
are -2.898 and 2.898.

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Figure 9.13 The required p-value

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Example 9-7: Solution

Step 4:

s
.80
sx

.18856181
n
18
x 12.9 12.5
t

2.121
sx
.18856181

The value of the test statistic t = 2.121 falls between the

two critical points, -2.898 and 2.898, which is the
nonrejection region. Consequently, we fail to reject H0. As
a result, we can state the difference between the
hypothesized population mean and the sample mean is so
small that it may have occurred because of sampling error.

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Example 9-8
The management at Massachusetts Savings Bank is always
concerned about the quality of service provided to its
customers. With the old computer system, a teller at this
bank could serve, on average, 22 customers per hour. The
management noticed that with this service rate, the waiting
time for customers was too long. Recently the management
of the bank installed a new computer system in the bank,
expecting that it would increase the service rate and
consequently make the customers happier by reducing the
waiting time. To check if the new computer system is more
efficient than the old system, the management of the bank
took a random sample of 70 hours and found that during
these hours the mean number of customers served by
tellers was 27 per hour with a standard deviation of 2.5.
Testing at the 1% significance level, would you conclude
that the new computer system is more efficient than the old
computer system?
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Example 9-8: Solution

Step 1: H0 : = 22 H1 : > 22
Step 2: The population standard deviation is not known and
the sample size is large (n > 30). Consequently, we will use the
t distribution to perform the test.

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Example 9-8: Solution

Step 3: Significance level = .01. The > sign in the
alternative hypothesis indicates that the test is right-tailed
and the rejection region lies in the right tail.
Area in the right tail = = .01.
df = n 1 = 70 1 = 69.
The critical value for t for 69 df and .01 area in the right tail
is 2.382.

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Figure 9.14

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Example 9-8: Solution

Step 4:

s
2.5

.29880715
n
70
x
27 22
t

16.733
sx
.29880715
sx

The value of the test statistic t = 16.733 is greater than the

critical value of t = 2.382, and it falls in the rejection
region. Consequently, we reject H0. As a result, we
conclude that the value of the sample mean is too large
compared to the hypothesized value of the population
mean, and the difference between the two may not be
attributed to chance alone.
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Tests of Hypothesis for Using the t Distribution

What If the Sample Size Is Too Large?
1. Use the t value from the last row (the row of ) in Table
V of Appendix C.
2. Use the normal distribution as an approximation to the t
distribution.

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HYPOTHESIS TESTS ABOUT A POPULATION

PROPORTION: LARGE SAMPLES
Test Statistic
The value of the test statistic z for the sample proportion,
is computed as

p ,

p p
pq
z
where p
p
n
The value of p that is used in this formula is the one from the
null hypothesis. The value of q is equal to 1-p. The value of z
using the above formula is also called the
calculated for p
observed value of z.

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Example 9-9
In a 2011 National Institute on Alcohol Abuse and Alcoholism
survey, 33% of American adults said that they had never
consumed alcohol (USA TODAY, November 17, 2011).
Suppose that this result is true for the 2011 population of
American adults. In a recent random sample of 2300 adult
Americans, 35% said that they had never consumed alcohol.
Find the p-value to test the hypothesis that the current
percentage of American adults who have never consumed
alcohol is different from 33%. What is your conclusion if the
significance level is 5%?

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Example 9-9: Solution

Step 1: H0 : p = .33
H1 : p .33
Step 2: To check whether the sample is large, we calculate the
values of np and nq:
np = 2300(.33) = 759 > 5
nq = 2300(.67) = 1541 > 5
Consequently, we will use the normal distribution to find the
p-value for this test.

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Example 9-9: Solution

Step 3: The sign in the alternative hypothesis indicates
that the test is two-tailed.

.33 .67)
2300

= .00980461

.35 .33
=
=
= 2.04

.00980461
p-value = 2(.0207) = .0414

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Figure 9.15 The required p-value

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Example 9-9: Solution

Step 4: We can state that for any greater than .0414 we
will reject the null hypothesis. For our example, = .05,
which is greater than the p-value of .0414. As a result, we
reject H0 and conclude that the current percentage of
American adults who have never consumed alcohol is
significantly different from .33. Consequently, we can state
that the difference between the hypothesized population
proportion of .33 and the sample proportion of .35 is too
large to be attributed to sampling error alone when = .05.

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Example 9-10
When working properly, a machine that is used to make
chips for calculators does not produce more than 4%
defective chips. Whenever the machine produces more
than 4% defective chips, it needs an adjustment. To check
if the machine is working properly, the quality control
department at the company often takes samples of chips
and inspects them to determine if they are good or
defective. One such random sample of 200 chips taken
recently from the production line contained 12 defective
chips. Find the p-value to test the hypothesis whether or
not the machine needs an adjustment. What would your
conclusion be if the significance level is 2.5%?

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Example 9-10: Solution

Step 1: H0: p .04
H1: p > .04
Step 2: To check whether the sample is large, we calculate
the values of np and nq:
np = 200(.04) = 8 > 5
nq = 200(.96) = 192 > 5
Consequently, we will use the normal distribution to find the
p-value for this test.

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Example 9-10: Solution

Step 3: The > sign in the alternative hypothesis indicates
that the test is right-tailed.

pq
(.04)(.96)

.01385641
n
200
p p
.06 .04
z

1.44
p
.01385641

p-value = .0749

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Figure 9.16 The required p-value

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Example 9-10: Solution

Step 4: We can state that for any greater than .0749 we
will reject the null hypothesis, and for any less than or
equal to .0749 we will not reject the null hypothesis. For
our example, = .025, which is less than the p-value of
.0749. As a result, we fail to reject H0 and conclude that the
machine does not need an adjustment.

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Example 9-11
Refer to Example 9-9. In a 2011 National Institute on
Alcohol Abuse and Alcoholism survey, 33% of American
adults said that they had never consumed alcohol (USA
TODAY, November 17, 2011). Suppose that this result is
true for the 2011 population of American adults. In a recent
random sample of 2300 adult Americans, 35% said that
they had never consumed alcohol. Using a 5% significance
level, can you conclude that the current percentage of
American adults who have never consumed alcohol is
different from 33%?

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Example 9-11: Solution

Step 1: H0 : p = .33
H1 : p .33
Step 2: To check whether the sample is large, we calculate the
values of np and nq:
np = 2300(.33) = 759 > 5
nq = 2300(.67) = 1541 > 5
Consequently, we will use the normal distribution to find the
p-value for this test.

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Example 9-11: Solution

Step 3: The sign in the alternative hypothesis indicates that
the test is two-tailed.
The significance level = .05. Therefore, the total area of the
two rejection regions is .05, and the rejection region in each
tail of the sampling distribution is /2 = .05/2 = .025.
The critical values of z, obtained from the standard normal
distribution table, are -1.96 and 1.96, as shown in Figure
9.17.

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Figure 9.17 The critical values of z

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Example 9-11: Solution

Step 4:

.33 .67)
2300

= .00980461

.35 .33
=
=
= 2.04

.00980461

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Example 9-11: Solution

Step 5: The value of the test statistic z = 2.04 falls in the
rejection region. As a result, we reject H0 and conclude that
the current percentage of American adults who have never
consumed alcohol is significantly different from .33.
Consequently, we can state that the difference between the
hypothesized population proportion of .33 and the sample
proportion of .35 is too large to be attributed to sampling
error alone when = .05.

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Example 9-12
Direct Mailing Company sells computers and computer parts
by mail. The company claims that at least 90% of all orders
are mailed within 72 hours after they are received. The
quality control department at the company often takes
samples to check if this claim is valid. A recently taken
sample of 150 orders showed that 129 of them were mailed
within 72 hours. Do you think the companys claim is true?
Use a 2.5% significance level.

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Example 9-12: Solution

Step 1: H0 : p .90
H1 : p < .90
Step 2: To check whether the sample is large, we calculate
the values of np and nq:
np = 150(.90) = 135 > 5
nq = 150(.10) = 15 > 5
Consequently, we will use the normal distribution to make
the test.

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Example 9-12: Solution

Step 3: Significance level = .025. The < sign in the
alternative hypothesis indicates that the test is left-tailed,
and the rejection region leis in the left tail.
The critical values of z for .0250 area in the left tail is -1.96.

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Figure 9.18 The critical values of z

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Example 9-12: Solution

Step 4:

pq
(.90)(.10)

.02449490
n
150
p p
.86 .90
z

1.63
p
.02449490

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Example 9-12: Solution

Step 5: The value of test statistic z = -1.63 is greater than
the critical value of z = -1.96, and it falls in the
nonrejection region. Therefore, we fail to reject H0. We can
state that the difference between the sample proportion and
the hypothesized value of the population proportion is
small, and this difference may have occurred owing to the
chance alone.

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Case Study 9-2 Is Raising Taxes on the Rich Fair?

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TI-84

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Minitab

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Minitab

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Minitab

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Excel

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Excel

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Excel

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