1

CHAPTER V
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 is no new value or standard. The burden is
then placed on the researcher to demonstrate through gathered data that the null
hypothesis is false.
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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

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
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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.

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 ().
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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

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:
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 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
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method determines the critical mean value required for z to be in the rejection
region and uses it to test the hypothesis.

Similar to that of the first method, the critical value method uses the formula
x x
Z Z
 or  depending on the knowledge of the population standard
n n
deviation. However, instead of a calculated 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
3,000 Or
16
3,000
X c  35,000  1.96 =35,000 ± 750. Therefore, Xc =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
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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.

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
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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 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
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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
=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

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.
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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 distributed, with a mean of P and a standard deviation of  p
 pq 
  , when np and nq are greater than or equal to 5. If np and nq are greater
 n 
 
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
Ha: P > 0.35
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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 / -1.26/ < 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

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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 (n 1, n2  30) and if the parent
populations are normally distributed regardless of the sample size the difference
in two sample means is normally distributed.

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;
 12  22
and the standard error is  X 1  X   .
2
n1 n 2

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 n 2
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 1
 
X  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
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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
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
ZX
1X2   Z  20,000 18,500   3.36
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
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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 =?
14  12.5   0
ZX
1X2   Z  1412.5   2.68
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
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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
ZX
1X2   Z  20, 60019, 700   2.30
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.

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:
S 12  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.

t
X 1  X 2   1   2   
Once S X  X is known t is computed as: S12  n1  1  S 22  n 2  1 1 1
1 2

n1  n 2  2 n1 n 2
Or

t
X 1 
 X 2   1   2  S p2  PooledVari ance
S p2 S p2 ; Where S12  n1  1  S 22  n 2  2
 
n1 n2 n1  n 2  2
 18

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 
  
 n1 n 2 
S 12 S 22 V  df  2 2
SX   ;  S 12   S 22 
1X2
n1 n 2    
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
2
S 1 = 64 hrs 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 = n 1 + n2 - 2
/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 =?
tX 
X 1 
 X 2   1   2 
t 24.5  28.7 
 24.5  28.7   0  1.41
64 20  1  7112  1
1X2 2 2
S S = 1 1
p

p

n1 n2 20  12  2 20 12

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

 19

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
2
S1 = 64 hrs 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.

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 n 1 items from the first population and n 2
 20

X1 X2
items from the second; and calculate P1  and P2  . Once we obtain P1
n1 n2
and P2 , we use a test based on the standard normal 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, (P 1-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 (1  P1 ) P2 (1  P2 )
P1-P2 a standard deviation of  , and
n1 n2

Z
P  P    P  P 
1 2 1 2

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 H o to be
true at the equality, we are assuming P1 = P 2. When this occurs, we combine or
pool the two sample proportions to provide one estimate. This pooled estimator,
n1 p1  n 2 p 2 X 1  X 2
denoted by P , is as P   , and the standard deviation  p1  p 2
n1  n 2 n1  n 2
 1 1 
is estimated by S p 1 p2 , which is calculated as S p  p  P(1  P)   =
1 2
 n1 n 2 
 21

 1 1  P Q PQ Z
P  P    P  P 
1 2 1 2

PQ   =  and Z is calculated as  1 1  . And

 n1 n 2  n1 n2 PQ  
 n1 n 2 

Z
P  P 
1 2

when P1 =P2, Z becomes  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 1  X 2 170  200
P   0.4625
n1  n 2 400  400

Z
P  P    P  P 
1 2 1 2
 0.5  0.425  0  2.13
Sample  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
 22

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
n1 = 150 n2= 150
x1 = 30 x2 = 15
X  X2 30  15
P 1   0.15
n1  n 2 150  150

Z
P  P    P  P 
1 2 1 2
 0.20  0.10  0  2.43
Sample  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 1  X 2 10  20
P   0.30
n1  n 2 50  50

Z
P  P    P  P 
1 2 1 2
 0.20  0.40  0  2.18
Sample  1 1  =  1 1 
PQ   0.30 * 0.70  
 n1 n 2   50 50 
 23

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.

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 oz, 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?
 24

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 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
 25

(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

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
 26

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.
Xc 
Z 
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 Xc= 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.
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
99.

Solving the area between Xc = 96.686 and μ = 99 yields

 27

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 Xc = 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
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:
 28

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 Xc = 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 Xc = 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.
 29

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 Xc = 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 Xc = 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.
 30

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).