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Statistics Assignment 1

The document discusses applications of the Z-test and T-test and how they help with business decisions. The Z-test can test for single proportions, differences in proportions, and single means. It assumes a normal distribution. The T-test can test for single means and differences in means. Both help test hypotheses about population parameters. The Z-test helps investors evaluate average daily returns. The T-test helps businesses determine if observation results can be relied on for decisions, such as comparing customer service times or employee performance.

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Mr Chaitanya Valiveti IPE
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129 views2 pages

Statistics Assignment 1

The document discusses applications of the Z-test and T-test and how they help with business decisions. The Z-test can test for single proportions, differences in proportions, and single means. It assumes a normal distribution. The T-test can test for single means and differences in means. Both help test hypotheses about population parameters. The Z-test helps investors evaluate average daily returns. The T-test helps businesses determine if observation results can be relied on for decisions, such as comparing customer service times or employee performance.

Uploaded by

Mr Chaitanya Valiveti IPE
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Give some applications of Z test and t test and explain how it helps

in arriving at business decisions.


The Z-test is used to determine whether two population means are different when
the variances are known and the sample size is large. The test is assumed to have a
normal distribution and other parameters like standard deviation to get an accurate
z-test.

Applications of Z test

Test for single proportion

If the observations on various items or objects are categorized into two classes
c1 and c2 (binomial population), defective or not defective item, we often want to test
the hypothesis, whether the proportion of items in a particular class, defective items
is P0 or not.

Test for significance for difference of proportions

If we are given two populations and each item of population belongs to either two
classes C1 and C2, we are often interested to know whether the proportion of items
in class C1 in both the populations is same or not. This another application of Z-test.

Test of significance of single mean

This application is used to test if the mean of the population has a specified value i.e.
if the population has a specified mean value. It is also used to test whether sample
mean differs from hypothetical values of population means. Also it is used to test
whether the given random sample has been drawn from a population with specific
mean and variance.

 
Applications of T-test

T-test for single mean

To test if given normal population has a specified value of population mean, if the
sample mean differs from the specified value of population mean. The test statistic is
given by  

T-test for difference of means

If we want to test if two independent samples of sizes n1 and n2 have been drawn
from two normal populations with means μ1 and μ2. The t statistic is given by,

 
The z-test helps in knowing the average daily return selected for a test. Which would
help the investors to know if they have to reject the null hypothesis or not, and
conclude if the average daily return is greater than 1% or not. This is how z-test helps
in business decisions

The T-test helps in determining if an organisation can bank on the observation


results they are obtaining. Small businesses find this technique to be an economical
and precise way to compare observations. From comparing customer services times
and new product testing, to measuring employee performance, t-test helps in
business decisions.

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