UNIT 10 LARGE SAMPLE TESTS

Structure
10.1 Introduction
Objectives
10.2 Procedure of Testing of Hypothesis for Large Samples
10.3 Testing of Hypothesis for Population Mean Using Z-Test
10.4 Testing of Hypothesis for Difference of Two Population Means Using
Z-Test
10.5 Testing of Hypothesis for Population Proportion Using Z-Test
10.6 Testing of Hypothesis for Difference of Two Population Proportions
Using Z-Test
10.7 Testing of Hypothesis for Population Variance Using Z-Test
10.8 Testing of Hypothesis for Two Population Variances Using Z-Test
10.9 Summary
10.10 Solutions /Answers

10.1 INTRODUCTION
In previous unit, we have defined basic terms used in testing of hypothesis.
After providing you necessary material required for any test, we can move
towards discussing particular tests one by one. But before doing that let us tell
you the strategy we are adopting here.
First we categories the tests under two heads:
 Large sample tests
 Small sample tests
After that, their unit wise distribution is done. In this unit, we will discuss large
sample tests whereas in Units 11 and 12 we will discuss small sample tests.
The tests which are described in these units are known as “parametric tests”.
Sometimes in our studies in the fields of economics, psychology, medical, etc.
we take a sample of objects / units / participants / patients, etc. such as 70, 500,
1000, 10,000, etc. This situation comes under the category of large samples.
As a thumb rule, a sample of size n is treated as a large sample only if it
contains more than 30 units (or observations, n > 30). And we know that, for
large sample (n > 30), one statistical fact is that almost all sampling
distributions of the statistic(s) are closely approximated by the normal
distribution. Therefore, the test statistic, which is a function of sample
observations based on n > 30, could be assumed follow the normal distribution
approximately (or exactly).
But story does not end here. There are some other issues which need to be
taken care off. Some of these issues have been highlighted by making different
cases in each test as you will see when go through Sections 10.3 to 10.8 of this
unit.
This unit is divided into ten sections. Section 10.1 is introductory in nature.
General procedure of testing of hypothesis for large samples is described in
25
Testing of Hypothesis Section 10.2. In Section 10.3, testing of hypothesis for population mean is
discussed whereas in Section 10.4, testing of hypothesis for difference of two
population means with examples is described. Similarly, in Sections 10.5 and
10.6, testing of hypothesis for population proportion and difference of two
population proportions are explained respectively. Testing of hypothesis for
population variance and two population variances are described in Sections
10.7 and 10.8 respectively. Unit ends by providing summary of what we have
discussed in this unit in Section 10.9 and solution of exercises in Section 10.10.

Objectives
After studying this unit, you should be able to:
 judge for a given situation whether we should go for large sample test or
not;
 Applying the Z-test for testing the hypothesis about the population mean
and difference of two population means;
 Applying the Z-test for testing the hypothesis about the population
proportion and difference of two population proportions; and
 Applying the Z-test for testing the hypothesis about the population variance
and two population variances.

10.2 PROCEDURE OF TESTING OF HYPOTHESIS

FOR LARGE SAMPLES
As we have described in previous section that for large sample size (n > 30),
one statistical fact is that almost all sampling distributions of the statistic(s) are
closely approximated by the normal distribution. Therefore, when sample size
is large one can apply the normal distribution based test procedures to test the
hypothesis.
In previous unit, we have given the procedure of testing of hypothesis in
general. Let us now discuss the procedure of testing a hypothesis for large
samples in particular.
Suppose X1, X2, …, Xn is a random sample of size n (> 30) selected from a
population having unknown parameter  and we want to test the hypothesis
about the hypothetical / claimed / assumed value θ0 of parameter θ. For this, a
test procedure is required. We discuss it step by step as follows:
Step I: First of all, we have to setup null hypothesis H0 and alternative
hypothesis H1. Here, we want to test the hypothetical / claimed /
assumed value θ0 of parameter θ. So we can take the null and
alternative hypotheses as
H 0 :   0 and H1 :   0  for two-tailed test 
H 0 :   0 and H 1 :   0 
or  for one-tailed test 
H 0 :   0 and H 1 :   0 
In case of comparing same parameter of two populations of interest,
say, 1 and 2, then our null and alternative hypotheses would be
H 0 : 1  2 and H1 : 1  2 for two-tailed test 
26
 H 0 : 1  2 and H 1 : 1  2  Large Sample Tests
or   for one-tailed test 
H 0 : 1  2 and H 1 : 1  2 

Step II: After setting the null and alternative hypotheses, we have to choose
level of significance. Generally, it is taken as 5% or 1% (α = 0.05 or
0.01). And accordingly rejection and non-rejection regions will be
decided.
Step III: Third step is to determine an appropriate test statistic, say, Z in case
of large samples. Suppose Tn is the sample statistic such as sample
mean, sample proportion, sample variance, etc. for the parameter 
then for testing the null hypothesis, test statistic is given by
 we know that SE of a statistic is 
Tn  E(Tn ) Tn  E(Tn )  theSD of the sampling distribution 
Z 
SE(Tn ) Var(Tn )  of that statistic 
SE(Tn )  SD(Tn )  Var(Tn ) 

where, E(Tn) is the expectation (or mean) of Tn and Var(Tn) is

variance of Tn.
Step IV: As already mentioned for large samples, statistical fact is that almost
all sampling distributions of the statistic(s) are closely approximated
by the normal distribution as the parent population is normal or non-
normal. So, the test statistic Z will assumed to be approximately
normally distributed with mean 0 and variance 1 as
Tn  E(Tn )
Z ~ N(0,1)
Var(Tn )

By putting the values of Tn, E(Tn) and Var(Tn) in above formula we

calculate the value of test statistic Z. Let z be the calculated value of
test statistic Z.
Step V: After that, we obtain the critical (cut-off or tabulated) value(s) in the
sampling distribution of the test statistic Z corresponding to 
assumed in Step II. These critical values are given in Table-I
(Z-table) at the Appendix of Block 1 of this course corresponding to
different level of significance (α). For convenient some useful critical
values at α = 0.01, 0.05 for Z-test are given in Table 10.1 in this
section. After that, we construct rejection (critical) region of size α in
the probability curve of the sampling distribution of test statistic Z.
Step VI: Take the decision about the null hypothesis based on the calculated
and critical values of test statistic obtained in Step IV and Step V.
Since critical value depends upon the nature of the test that it is one-
tailed test or two-tailed test so following cases arise:
In case of one-tailed test:
Case I: When H 0 :   0 and H 1 :   0 (right-tailed test)

In this case, the rejection (critical) region falls under the right tail of
the probability curve of the sampling distribution of test statistic Z.
Fig. 10.1
Suppose z is the critical value at  level of significance so entire
region greater than or equal to z is the rejection region and less than
z is the non-rejection region as shown in Fig. 10.1.
Testing of Hypothesis If z (calculated value ) ≥ z (tabulated value), that means the
calculated value of test statistic Z lies in the rejection region, then we
reject the null hypothesis H0 at  level of significance. Therefore, we
conclude that sample data provides us sufficient evidence against the
null hypothesis and there is a significant difference between
hypothesized or specified value and observed value of the parameter.
If z < z , that means the calculated value of test statistic Z lies in non-
rejection region, then we do not reject the null hypothesis H0 at 
level of significance. Therefore, we conclude that the sample data
fails to provide us sufficient evidence against the null hypothesis and
the difference between hypothesized value and observed value of the
parameter due to fluctuation of sample.
so the population parameter θ may be 0.
Case II: When H 0 :    0 and H 1 :   0 (left-tailed test)

In this case, the rejection (critical) region falls under the left tail of the
probability curve of the sampling distribution of test statistic Z.
Suppose -z is the critical value at  level of significance then entire
region less than or equal to -z is the rejection region and greater
than -z is the non-rejection region as shown in Fig. 10.2.

Fig. 10.2 If z ≤-z, that means the calculated value of test statistic Z lies in the
rejection region, then we reject the null hypothesis H0 at  level of
significance.
If z >-z, that means the calculated value of test statistic Z lies in the
non-rejection region, then we do not reject the null hypothesis H0 at 
level of significance.
In case of two-tailed test: When H 0 :   0 and H 1 :   0

In this case, the rejection region falls under both tails of the
probability curve of sampling distribution of the test statistic Z. Half
the area (α) i.e. α/2 will lies under left tail and other half under the
right tail. Suppose  zα / 2 and zα / 2 are the two critical values at the
left-tailed and right-tailed respectively. Therefore, entire region less
than or equal to z  / 2 and greater than or equal to zα / 2 are the
rejection regions and between  zα / 2 and zα / 2 is the non-rejection
Fig. 10.3
region as shown in Fig. 10.3.

If z  z / 2 or z   z / 2 , that means the calculated value of test

statistic Z lies in the rejection region, then we reject the null
hypothesis H0 at  level of significance.

If zα/2  z  zα/ 2 , that means the calculated value of test statistic Z

lies in the non-rejection region, then we do not reject the null
hypothesis H0 at  level of significance.
Table 10.1 shows some commonly used critical (cut-off or tabulated) values
for one-tailed test and two-tailed test at different level of significance (α) for
Z-test.
 Table 10.1: Critical Values for Z-test Large Sample Tests

Level of Two-Tailed Test One-Tailed Test

Significance (α)
Right-Tailed Test Left- Tailed Test

α = 0.05 (= 5%) ± zα/2 = ± 1.96 zα = 1.645 − zα = − 1.645

α = 0.01 (= 1%) ± zα/2 = ± 2.58 zα = 2.33 − zα = − 2.33

Note 1: As we have discussed in Step IV of this procedure that when sample

size is large then test statistic follows the normal distribution as the parent
population is normal or non-normal so we do not require any assumption of the
form of the parent population for large sample size but when sample size is
small (n < 30) then for applying parametric test we must require the assumption
that the population is normal as we shall in Units 11 and 12. If this assumption
is not fulfilled then we apply the non-parametric tests which will be discussed
in Block 4 of this course.
Decision making procedure about the null hypothesis using the concept of
p-value:
To take the decision about the null hypothesis on the basis of p-value, the p-
value is compared with given level of significance (α) and if p-value is less
than or equal to  then we reject the null hypothesis and if the p-value is
greater than  we do not reject the null hypothesis.
Since test statistic Z follows approximately normal distribution with mean 0
and variance unity, i.e. standard normal distribution and we also know that
standard normal distribution is symmetrical about Z = 0 line therefore, if z
represents the calculated value of Z then p-value can be calculated as follows:
For one-tailed test:
For H1: θ > θ0 (right-tailed test)
p-value = P[Z  z]
For H1: θ < θ0 (left-tailed test)
p-value = P[Z  z]
For two-tailed test:
For H1:   0
p-value = 2P  Z  z 

These p-values for Z-test can be obtained with the help of Table-I (Z-table)
given in the Appendix at the end of Block 1 of this course (which gives the
probability [0  Z  z] for different value of z) as discussed in Unit 14 of
MST-003.
For example, if test is right-tailed and calculated value of test statistic Z is 1.23
then
p-value = P  Z  z   P  Z  1.23  0.5  P  0  Z  1.23

 0.5  0.3907  From Z-table given in Appendix 

of Block 1of this course. 
= 0.1093
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Testing of Hypothesis Now, you can try the following exercises.
E1) If an investigator observed that the calculated value of test statistic lies in
non-rejection region then he/she will
(i) reject the null hypothesis
(ii) accept the null hypothesis
(iii) not reject the null hypothesis
Write the correct option.
E2) If we have null and alternative hypotheses as
H0:  = 0 and H1:   0
then the rejection (critical) region lies in
(i) left tail
(ii) right tail
(iii) both tails
Write the correct option.
E3) If test is two-tailed and calculated value of test statistic Z is 2.42 then
calculate the p-value for the Z-test.

10.3 TESTING OF HYPOTHESIS FOR

POPULATION MEAN USING Z-TEST
In previous section, we have discussed the general procedure for Z-test. Now
we are discussing the Z-test for testing the hypothesis or claim about the
population mean when sample size is large. Let population under study has
mean  and variance σ2, where  is unknown and σ2 may be known or
unknown. We will consider both cases under this heading. For testing a
hypothesis about population mean we draw a random sample X1, X2,…,Xn of
size n  30 from this population. As we know that for drawing the inference
about the population mean we generally use sample mean and for test statistic,
we require the mean and standard error of sampling distribution of the statistic
(mean). Here, we are considering large sample so we know by central limit
theorem that sample mean is asymptotically normally distributed with mean 
and variance σ2/n whether parent population is normal or non-normal. That
is, if X is the sample mean of the random sample then
σ2
E  X   µ , Var  X   … (1)
n
But we know that standard error = Variance

σ
 SE  X   Var  X   … (2)
n
Now, follow the same procedure as we have discussed in previous section, that
is, first of all we have to setup null and alternative hypotheses. Since here we
want to test the hypothesis about the population mean so we can take the null
and alternative hypotheses as

30
 Here,    and 0  0  Large Sample Tests
H0 :   0 and H1 :   0 for two-tailed test if we compareit with 
general procedure. 
H0 :   0 and H1 :   0 
or  for one-tailed test 
H0 :   0 and H1 :   0 
When we assume that
For testing the null hypothesis, the test statistic Z is given by the null hypothesis is
true then we are actually
X  E X  assuming that the
Z
SE  X  population parameter is
equal to the value in the
X  µ0 null hypothesis. For
Z  Using equations (1) and (2) and  example, we assume that
σ/ n  under H 0 we assume that µ  µ 0 .  µ = 60 whether the null
hypothesis is µ = 60 or
The sampling distribution of the test statistic depends upon σ2 that it is known µ ≤ 60 or µ ≥ 60.
or unknown. Therefore, two cases arise:
Case I: When σ2 is known
In this case, the test statistic follows the normal distribution with
mean 0 and variance unity when the sample size is the large as the
population under study is normal or non-normal. If the sample size is
small then test statistic Z follows the normal distribution only when
population under study is normal. Thus,
X  µ0
Z ~ N  0, 1 
σ/ n
Case II: When σ2 is unknown
In this case, we estimate σ2 by the value of sample variance (S2)
where,
1 n 2
S2  
n  1 i1
 Xi  X 

X  0
Then become test statistic follows the t-distribution with
S/ n
(n−1) df as the sample size is large or small provided the population
under study follows normal as we have discussed in Unit 2 of this
course. But when population under study is not normal and sample
size is large then this test statistic approximately follows normal
distribution with mean 0 and variance unity, that is,
X  0
Z ~ N  0,1
S/ n
After that, we calculate the value of test statistic as may be the case (σ2 is
known or unknown) and compare it with the critical value given in Table 10.1
at prefixed level of significance α. Take the decision about the null hypothesis
as described in the previous section.
From above discussion of testing of hypothesis about population mean, we note
following point:
(i) When σ2 is known then we apply the Z-test as the population under study
is normal or non-normal for the large sample. But when sample size is

31
Testing of Hypothesis small then we apply the Z-test only when population under study is
normal.
(ii) When σ2 is unknown then we apply the t-test only when the population
under study is normal as sample size is large or small. But when the
assumption of normality is not fulfilled and sample size is large then we
can apply the Z-test.
(iii) When sample is small and σ2 is known or unknown and the form of the
population is not known then we apply the non-parametric test as we will
be discussed in Block 4 of this course.
Following examples will help you to understand the procedure more clearly.
Example 1: A light bulb company claims that the 100-watt light bulb it sells
has an average life of 1200 hours with a standard deviation of 100 hours. For
testing the claim 50 new bulbs were selected randomly and allowed to burn
out. The average lifetime of these bulbs was found to be 1180 hours. Is the
company’s claim is true at 5% level of significance?
Solution: Here, we are given that
Specified value of population mean = 0 = 1200 hours,
Population standard deviation = σ = 100 hours,
Sample size = n = 50
Sample mean = X = 1180 hours.
In this example, the population parameter being tested is population mean i.e.
average life of a bulb (µ) and we want to test the company’s claim that average
life of a bulb is 1200 hours. So our claim is  = 1200 and its complement is
 ≠ 1200. Since claim contains the equality sign so we can take the claim as the
null hypothesis and complement as the alternative hypothesis. So
H 0 :    0  1200 average life of a bulb is 1200 hours 
H 1 :   1200 average life of a bulb is not1200 hours 
Also the alternative hypothesis is two-tailed so the test is two-tailed test.
Here, we want to test the hypothesis regarding mean when population SD
(variance) is known and sample size n = 50(> 30) is large. So we will go for
Z-test.
Thus, for testing the null hypothesis the test statistic is given by
X  0
Z
/ n
1180  1200 20
   1.41
100 / 50 14.14
The critical (tabulated) values for two-tailed test at 5% level of significance are
± zα/2 = ± z0.025 = ± 1.96.
Fig. 10.4 Since calculated value of test statistic Z ( = –1.41) is greater than critical value
(= − 1.96) and less than the critical value (= 1.96), that means it lies in non-
rejection region as shown in Fig. 10.4, so we do not reject the null hypothesis.
Since the null hypothesis is the claim so we support the claim at 5% level of
significance.
Decision according to p-value:
The test is two-tailed, therefore,
p-value = 2P Z  z   2P  Z  1.41 Large Sample Tests

 2  0.5  P  0  Z  1.41  2  0.5  0.4207   0.1586

Since p-value (= 0.1586) is greater than α (= 0.05) so we do not reject the null
hypothesis at 5% level of significance.
Decision according to confidence interval:
Here, test is two-tailed, therefore, we contract two-sided confidence interval for
population mean.
Since population standard deviation is known, therefore, we can use
(1−α) 100 % confidence interval for population mean when population
variance is known which is given by
   
X  z  / 2 n , X  z / 2 n 
 

Here,  = 0.05, we have z /2  z0.025  1.96.

Thus, 95% confidence interval for average life of a bulb is given by

 100 100 
1180  1.96 50 ,1180  1.96 50 
 
or 1180  27.71,1180  27.71 
or 1152.29, 1207.71
Since 95% confidence interval for average life of a bulb contains the value of
the parameter specified by the null hypothesis, that is,    0  1200 so we do
not reject the null hypothesis.
Thus, we conclude that sample does not provide us sufficient evidence against
the claim so we may assume that the company’s claim that the average life of a
bulb is 1200 hours is true.
Note 2: Here, we note that the decisions about null hypothesis based on three
approaches (critical value or classical, p-value and confidence interval) are
same. The learners are advised to make the decision about the claim or
statement by using only one of the three approaches in the examination. Here,
we used all these approaches only to give you an idea how they can be used in
a given problem. Those learners who will opt biostatistics specialisation will
see and realize the importance of confidence interval approach in Unit 16 of
MSTE-004.
Example 2: A manufacturer of ball point pens claims that a certain pen
manufactured by him has a mean writing-life at least 460 A-4 size pages. A
purchasing agent selects a sample of 100 pens and put them on the test. The
mean writing-life of the sample found 453 A-4 size pages with standard
deviation 25 A-4 size pages. Should the purchasing agent reject the
manufacturer’s claim at 1% level of significance?
Solution: Here, we are given that
Specified value of population mean = 0 = 460,

33
Testing of Hypothesis Sample size = n = 100,
Sample mean = X = 453,
Sample standard deviation = S = 25
Here, we want to test the manufacturer’s claim that the mean writing-life (µ) of
pen is at least 460 A-4 size pages. So our claim is  ≥ 460 and its complement
is  < 460. Since claim contains the equality sign so we can take the claim as
the null hypothesis and the complement as the alternative hypothesis. So
H 0 :    0  460 and H 1 :   460

Also the alternative hypothesis is left-tailed so the test is left-tailed test.

Here, we want to test the hypothesis regarding population mean when
population SD is unknown. So we should used t-test for if writing-life of pen
follows normal distribution. But it is not the case. Since sample size is n = 100
(n > 30) large so we go for Z-test. The test statistic of Z-test is given by
X  0
Z
S/ n
453  460 7
   2.8
25 / 100 2.5
We have from Table 10.1 the critical (tabulated) value for left-tailed Z test at
1% level of significance is zα = −2.33.
Since calculated value of test statistic Z (= ‒2.8) is less than the critical value
(= −2.33), that means calculated value of test statistic Z lies in rejection region
Fig. 10.5 as shown in Fig. 10.5, so we reject the null hypothesis. Since the null
hypothesis is the claim so we reject the manufacturer’s claim at 1% level of
significance.
Decision according to p-value:
The test is left-tailed, therefore,

p-value = P  Z  z  P Z  2.8  P Z  2.8  Z is symetrical 

about Z  0 line 

 0.5  P 0  Z  2.8  0.5  0.4974  0.0026

Since p-value (= 0.0026) is less than α (= 0.01) so we reject the null hypothesis
at 1% level of significance.
Therefore, we conclude that the sample provide us sufficient evidence against
the claim so the purchasing agent rejects the manufacturer’s claim at 1% level
of significance.
Now, you can try the following exercises.
E4) A sample of 900 bolts has a mean length 3.4 cm. Is the sample regarded
to be taken from a large population of bolts with mean length 3.25 cm
and standard deviation 2.61 cm at 5% level of significance?
E5) A big company uses thousands of CFL lights every year. The brand that
the company has been using in the past has average life of 1200 hours. A
new brand is offered to the company at a price lower than they are paying
 for the old brand. Consequently, a sample of 100 CFL light of new brand Large Sample Tests
is tested which yields an average life of 1220 hours with standard
deviation 90 hours. Should the company accept the new brand at 5% level
of significance?

10.4 TESTING OF HYPOTHESIS FOR

DIFFERENCE OF TWO POPULATION MEANS
USING Z-TEST
In previous section, we have learnt about the testing of hypothesis about the
population mean. But there are so many situations where we want to test the
hypothesis about difference of two population means or two population means.
For example, two manufacturing companies of bulbs are produced same type
of bulbs and one may be interested to test that one is better than the other, an
investigator may want to test the equality of the average incomes of the peoples
living in two cities, etc. Therefore, we require an appropriate test for testing the
hypothesis about the difference of two population means.
Let there be two populations, say, population-I and population-II under study.
Also let 1 ,  2 and 12 ,  22 denote the means and variances of population-I and
population-II respectively where both 1 and 2 are unknown but 12 and 22 may
be known or unknown. We will consider all possible cases here. For testing the
hypothesis about the difference of two population means, we draw a random
sample of large size n1 from population-I and a random sample of large size n2
from population-II. Let X and Y be the means of the samples selected from
population-I and II respectively.
These two populations may or may not be normal but according to the central
limit theorem, the sampling distribution of difference of two large sample
means asymptotically normally distributed with mean (µ1-µ2) and variance
(σ12 / n1  σ 22 / n 2 ) as described in Unit 2 of this course.
Thus,
E  X  Y   E  X   E  Y   1   2 … (3)

and
12 22
Var  X  Y   Var  X   Var  Y   
n1 n 2
But we know that standard error = Variance

12 22
 SE  X  Y   Var  X  Y    … (4)
n1 n 2
Now, follow the same procedure as we have discussed in Section 10.2, that is,
first of all we have to setup null and alternative hypotheses. Here, we want to
test the hypothesis about the difference of two population means so we can take
the null hypothesis as
 Here, 1  1 and 2   2 
H0 : 1  2 (no difference in means) if we compareit with 
 general procedure. 
35
Testing of Hypothesis or H 0 : 1  2  0 (difference in two means is 0)
and the alternative hypothesis as
H1 : 1  2 for two-tailed test 

H0 : 1  2 and H1 : 1  2 
or  for one-tailed test 
H0 : 1  2 and H1 : 1  2 
For testing the null hypothesis, the test statistic Z is given by

Z
 X  Y   E X  Y 
SE  X  Y 

 X  Y    µ1  µ 2 
or Z  using equations (3) and (4) 
σ12 σ 22

n1 n 2
Since under null hypothesis we assume that µ1 = µ2, therefore, we have
XY
Z
σ12 σ 22

n1 n 2

Now, the sampling distribution of the test statistic depends upon 12 and 22
that both are known or unknown. Therefore, four cases arise:
Case I: When 12 & 22 are known and 12 22  2
In this case, the test statistic follows normal distribution with mean
0 and variance unity when the sample sizes are large as both the
populations under study are normal or non-normal. But when
sample sizes are small then test statistic Z follows normal
distribution only when populations under study are normal, that is,
XY
Z ~ N  0,1 
1 1
σ 
n1 n2
Case II: When 12 & 22 are known and 12  22
In this case, the test statistic also follows the normal distribution as
described in case I, that is,
XY
Z ~ N(0, 1)
σ12 σ 22

n1 n 2

Case III: When 12 & 22 are unknown and 12 22  2

In this case, σ2 is estimated by value of pooled sample variance S2p

where,
1
S2p   n1S12  n 2S22 
n1  n 2  2 
and
36
 n n Large Sample Tests
1 1
2 1 2
2
2
S 
1 
(n1  1) i1
 Xi  X  and S22  
(n 2  1) i1
 Yi  Y 

and test statistic follows t-distribution with (n1 + n2 − 2) degrees of

freedom as the sample sizes are large or small provided populations
under study follow normal distribution as described in Unit 2 of this
course. But when the populations are under study are not normal
and sample sizes n1 and n2are large (> 30) then by central limit
theorem, test statistic approximately normally distributed with mean
0 and variance unity, that is,
XY
Z ~ N  0,1 
1 1
Sp 
n1 n 2
Case IV: When 12 & 22 are unknown and 12  22

In this case, 12 & 22 are estimated by the values of the sample
variances S12 &S22 respectively and the exact distribution of test
statistic is difficult to derive. But when sample sizes n1 and n2 are
large (> 30) then central limit theorem, the test statistic
approximately normally distributed with mean 0 and variance unity,
that is,
XY
Z ~ N(0, 1)
S12 S22

n1 n 2
After that, we calculate the value of test statistic and compare it with the
critical value given in Table 10.1 at prefixed level of significance α. Take the
decision about the null hypothesis as described in Section10.2.
From above discussion of testing of hypothesis about population mean, we note
following point:
(i) When 12 & 22 are known then we apply the Z-test as both the population
under study are normal or non-normal for the large sample. But when
sample sizes are small then we apply the Z-test only when populations
under study are normal.
(ii) When 12 & 22 are unknown then we apply the t-test only when the
populations under study are normal as sample sizes are large or small.
But when the assumption of normality is not fulfilled and sample sizes
are large then we can apply the Z-test.
(iii) When samples are small and 12 & 22 are known or unknown and the
form of the population is not known then we apply the non-parametric
test as we will be discussed in Block 4 of this course.
Let us do some examples based on above test.
Example 3: In two samples of women from Punjab and Tamilnadu, the mean
height of 1000 and 2000 women are 67.6 and 68.0 inches respectively. If
population standard deviation of Punjab and Tamilnadu are same and equal to
5.5 inches then, can the mean heights of Punjab and Tamilnadu women be
regarded as same at 1% level of significance?
37
Testing of Hypothesis Solution: We are given
n1 = 1000, n2 = 2000, X  67.6, Y  68.0 and σ1  σ2  σ  5.5
Here, we wish to test that the mean height of Punjab and Tamilnadu women is
same. If 1 and 2 denote the mean heights of Punjab and Tamilnadu women
respectively then our claim is 1 = 2 and its complement is 1 ≠ 2. Since the
claim contains the equality sign so we can take the claim as the null hypothesis
and complement as the alternative hypothesis. Thus,
H 0 : 1   2 and H1 : 1   2
Since the alternative hypothesis is two-tailed so the test is two-tailed test.
Here, we want to test the hypothesis regarding two population means. The
standard deviations of both populations are known and sample sizes are large,
so we should go for Z-test.
So, for testing the null hypothesis, the test statistic Z is given by
XY
Z
σ12 σ 22

n1 n 2
67.6  68.0  0.4
 2 2

  5.5   5.5   1 1 
 1000  2000  5.5   
 1000 2000 
 
 0.4
  1.88
5.5  0.0387
The critical (tabulated) values for two-tailed test at 1% level of significance are
± zα/2 = ± z0.005 = ± 2.58.
Since calculated value of Z ( = −1.88) is greater than the critical value
(= − 2.58) and less than the critical value (= 2.58), that means it lies in non-
rejection region as shown in Fig. 10.6, so we do not reject the null hypothesis
i.e. we fail to reject the claim.
Decision according to p-value:
Fig. 10.6
The test is two-tailed, therefore,
p-value = 2P  Z  z   2P  Z  1.88

 2  0.5  P  0  Z  1.88  2  0.5  0.4699   0.0602

Since p-value (= 0.0602) is greater than  (  0.01) so we do not reject the null
hypothesis at1% level of significance.
Thus, we conclude that the samples do not provide us sufficient evidence
against the claim so we may assume that the average height of women of
Punjab and Tamilnadu is same.
Example 4: A university conducts both face to face and distance mode classes
for a particular course indented both to be identical. A sample of 50 students of
face to face mode yields examination results mean and SD respectively as:
X  80.4, S1  12.8
and other sample of 100 distance-mode students yields mean and SD of their Large Sample Tests
examination results in the same course respectively as:
Y  74.3, S2  20.5
Are both educational methods statistically equal at 5% level?
Solution: Here, we are given that
n1  50, X  80.4, S1  12.8;

n 2  100 , Y  74.3, S2  20.5

We wish to test that both educational methods are statistically equal. If 1 and
2 denote the average marks of face to face and distance mode students
respectively then our claim is 1 = 2 and its complement is 1 ≠ 2. Since the
claim contains the equality sign so we can take the claim as the null hypothesis
and complement as the alternative hypothesis. Thus,
H 0 : 1   2 and H1 : 1   2
Since the alternative hypothesis is two-tailed so the test is two-tailed test.
We want to test the null hypothesis regarding two population means when
standard deviations of both populations are unknown. So we should go for t-
test if population of difference is known to be normal. But it is not the case.
Since sample sizes are large (n1, and n2 > 30) so we go for Z-test.
For testing the null hypothesis, the test statistic Z is given by
XY
Z
S12 S22

n1 n 2

80.4  74.3 6.1

   2.23
12.8 
2
 20.5 
2 3.28  4.20
 Fig. 10.7
50 100
The critical (tabulated) values for two-tailed test at 5% level of significance are
± zα/2 = ± z0.025 = ± 1.96.
Since calculated value of Z ( = 2.23) is greater than the critical values
(= ±1.96 ), that means it lies in rejection region as shown in Fig. 10.7, so we
reject the null hypothesis i.e. we reject the claim at 5% level of significance.
Decision according to p-value:
The test is two-tailed, therefore,

p-value = 2P  Z  z   2P  Z  2.23

 2  0.5  P 0  Z  2.23  2  0.5  0.4871  0.0258

Since p-value (= 0.0258) is less than  (  0.05) so we reject the null hypothesis
at 5% level of significance.
Thus, we conclude that samples provide us sufficient evidence against the
claim so both methods of education, i.e. face-to-face and distance-mode, are
not statistically equal.
Testing of Hypothesis Now, you can try the following exercises.
E6) Two brands of electric bulbs are quoted at the same price. A buyer was
tested a random sample of 200 bulbs of each brand and found the
following information:
Mean Life (hrs.) SD(hrs.)
Brand A 1300 41
Brand B 1280 46
Is there significant difference in the mean duration of their lives of two
brands of electric bulbs at 1% level of significance?
E7) Two research laboratories have identically produced drugs that provide
relief to BP patients. The first drug was tested on a group of 50 BP
patients and produced an average 8.3 hours of relief with a standard
deviation of 1.2 hours. The second drug was tested on 100 patients,
producing an average of 8.0 hours of relief with a standard deviation of
1.5 hours. Does the first drug provide a significant longer period of relief
at a significant level of 5%?

10.5 TESTING OF HYPOTHESIS FOR

POPULATION PROPORTION USING Z-TEST
In Section 10.3, we have discussed the procedure of testing of hypothesis for
population mean when sample size is large. But in many real world situations,
in business and other areas where collected data are in form of counts or the
collected data are classified into two categories or groups according to an
attribute or a characteristic. For example, the peoples living in a colony may be
classified into two groups (male and female) with respect to the characteristic
sex, the patients in a hospital may be classified into two groups as cancer and
non-cancer patients, the lot of articles may be classified as defective and non-
defective, etc. Here, collected data are available in dichotomous or binary
outcomes which is a special case of nominal scale and the data categorized into
two mutually exclusive and exhaustive classes generally known as success and
failure out comes. For example, the characteristic sex can be measured as
success if male and failure if female or vice versa. So in such situations,
proportion is suitable measure to apply.
In such situations, we require a test for testing a hypothesis about population
proportion.
For this purpose, let X1 , X 2 , ..., X n be a random sample of size n taken from a
population with population proportion P. Also let X denotes the number of
observations or elements possess a certain attribute (number of successes) out
of n observations of the sample then sample proportion p can be defined as
X
p 1
n
As we have seen in Section 2.4 of the Unit 2 of this course that mean and
variance of the sampling distribution of sample proportion are
PQ
E(p)  P and Var(p) 
n
where, Q = 1‒ P.
40
Now, two cases arise: Large Sample Tests

Case I: When sample size is not sufficiently large i.e. either of the conditions
np > 5 or nq > 5 does not meet, then we use exact binomial test. But exact
binomial test is beyond the scope of this course.
Case II: When sample size is sufficiently large, such that np > 5 and nq > 5
then by central limit theorem, the sampling distribution of sample proportion p
is approximately normally distributed with mean and variance as
PQ
E(p) = P and Var(p) = … (5)
n
But we know that standard error = Variance

PQ
 SE (p)  … (6)
n
Now, follow the same procedure as we have discussed in Section 10.2, first of
all we setup null and alternative hypotheses. Since here we want to test the
hypothesis about specified value P0 of the population proportion so we can take
the null and alternative hypotheses as
Here,   P and   P0 
H 0 : P  P0 and H1 : P  P0 for two-tailed test   if we compare it with
0

 general procedure. 

H 0 : P  P0 and H1 : P  P0 
or  for one-tailed test 
H 0 : P  P0 and H1 : P  P0 
For testing the null hypothesis, the test statistic Z is given by
p  E p 
Z
SE  p 
p  P0
Z ~ N  0, 1  under H0  using equations(5) and (6) 
P0 Q 0
n
After that, we calculate the value of test statistic and compare it with the
critical value(s) given in Table 10.1 at prefixed level of significance α. Take
the decision about the null hypothesis as described in Section 10.2.
Let us do some examples of testing of hypothesis about population proportion.
Example 5: A machine produces a large number of items out of which 25%
are found to be defective. To check this, company manager takes a random
sample of 100 items and found 35 items defective. Is there an evidence of more
deterioration of quality at 5% level of significance?
Solution: The company manager wants to check that his machine produces
25% defective items. Here, attribute under study is defectiveness. And we
define our success and failure as getting a defective or non defective item.
Let P = Population proportion of defectives items = 0.25(= P0 )
p = Observed proportion of defectives items in the sample = 35/100 = 0.35
Here, we want to test that machine produces more defective items, that is, the
proportion of defective items (P) greater than 0.25. So our claim is P > 0.25
41
Testing of Hypothesis and its complement is P ≤ 0.25. Since complement contains the equality sign so
we can take the complement as the null hypothesis and the claim as the
alternative hypothesis. So
H 0 : P  P0  0.25 and H 1 : P  0.25

Since the alternative hypothesis is right-tailed so the test is right-tailed test.

Before proceeding further, first we have to check whether the condition of
normality meets or not.
 np  100  0.35  35  5
nq  100   1  0.35   100  0.65  65  5

We see that condition of normality meets, so we can go for Z-test.

So, for testing the null hypothesis, the test statistic Z is given by
p  P0
Z
P0Q 0
n
0.35  0.25 0.10
   2.31
0.25  0.75 0.0433
100
Since test is right-tailed so the critical value at 5% level of significance is
zα = z0.05 = 1.645.
Since calculated value of test statistic Z (= 2.31) is greater than the critical
value (= 1.645), that means it lies in the rejection region as shown in Fig. 10.8.
So we reject the null hypothesis and support the alternative hypothesis i.e. we
Fig. 10.8 support the claim at 5% level of significance.
Decision according to p-value:
The test is right-tailed, therefore,

p-value = P  Z  z  P  Z  2.31

 0.5  P 0  Z  2.31  0.5  0.4896

 0.0104
Since p-value (= 0.0104) is less than  (  0.05) so we reject the null
hypothesis at 5% level of significance.
Thus, we conclude that the sample fails to provide us sufficient evidence
against the claim so we may assume that deterioration in quality exists at 5%
level of significance.
Example 6: A die is thrown 9000 times and draw of 2 or 5 is observed 3100
times. Can we regard that die is unbiased at 5% level of significance.
Solution: Let getting a 2 or 5 be our success, and getting a number other than 2
or 5 be a failure then in usual notions, we have
n = 9000, X = number of successes = 3100, p = 3100/9000 = 0.3444
Here, we want to test that the die is unbiased and we know that if die is Large Sample Tests
unbiased then proportion or probability of getting 2 or 5 is
P = Probability of getting a 2 or 5
= Probability of getting 2 + Probability of getting 5
1 1 1
    0.3333
6 6 3
So our claim is P = 0.3333 and its complement is P ≠ 0.3333. Since the claim
contains the equality sign so we can take the claim as the null hypothesis and
complement as the alternative hypothesis. Thus,
H0 : P  P0  0.3333 and H1 :P  0.3333

Since the alternative hypothesis is two-tailed so the test is two-tailed test.

Before proceeding further, first we have to check whether the condition of
normality meets or not.
 np  9000  0.3444  3099.6  5
nq  9000   1  0.3444   9000  0.6556  5900.4  5
We see that condition of normality meets, so we can go for Z-test.
So, for testing the null hypothesis, the test statistic Z is given by
p  P0
Z
P0Q 0
n
0.3444  0.3333 0.0111
   2.22
0.3333  0.6667 0.005
9000
Since test is two-tailed so the critical values at 5% level of significance are
± zα/2 = ± z0.025 = ±1.96.
Since calculated value of Z (= 2.22) is greater than the critical value (= 1.96),
that means it lies in rejection region, so we reject the null hypothesis i.e. we
reject our claim.
Decision according to p-value:
Since test is two-tailed so

p-value = 2P Z  z   2P  Z  2.22

 2 0.5  P  0  Z  2.22  2  0.5  0.4868  0.0264

Since p-value (= 0.0264) is less than  (  0.05), so we reject the null

hypothesis at 5% level of significance.
Thus, we conclude that the sample provides us sufficient evidence against the
claim so die cannot be considered as unbiased.
Now, you can try the following exercises.
E8) In a sample of 100 MSc. Economics first year students of a University, it
was seen that 54 students came from Science background and the rest are
43
Testing of Hypothesis from other background. Can we assume that 50% of the students are from
Science background in MSc. Economics first year students in the
University at 1% level of significance?
E9) Out of 200 patients who are given a particular injection 180 survived.
Test the hypothesis that the survival rate is more than 80% at 5% level of
significance?

10.6 TESTING OF HYPOTHESIS FOR

DIFFERENCE OF TWO POPULATION
PROPORTIONS USING Z-TEST
In Section 10.5, we have discussed the testing of hypothesis about the
population proportion. In some cases, we are interested to test the hypothesis
about difference of two population proportions of an attributes in the two
different populations or groups. For example, one may wish to test whether the
proportions of alcohol drinkers in the two cities are same, one may wish to test
proportion of literates in a group of people is greater than the proportion of
literates in other group of people, etc. Therefore, we require the test for testing
the hypothesis about the difference of two population proportions.
Let there be two populations, say, population-I and population-II under study.
And also let we draw a random sample of size n1 from population-I with
population proportion P1 and a random sample of size n2 from population-II
with population proportion P2. If X1 and X2 are the number of observations
/individuals / items / units possessing the given attribute in the sample of sizes
n1 and n2 respectively then sample proportions can be defined as
X1 X
p1  and p 2  2
n1 n2
As we have seen in Section 2.5 of the Unit 2 of this course that mean and
variance of the sampling distribution of difference of sample proportions are
E(p1-p2) = P1-P2
and variance
P1Q1 P2Q 2
Var(p 1-p2)  
n1 n2

where, Q1 = 1‒ P1 and Q2 = 1‒ P2.

Now, two cases arise:
Case I: When sample sizes are not sufficiently large i.e. any of the conditions
n1p1  5 or n1q1  5 or n 2 p2  5 or n 2q2  5 does not meet, then we use exact
binomial test. But exact binomial test is beyond the scope of this course.
Case II: When sample sizes are sufficiently large, such that n1p1  5, n1q1  5,
n2p2  5 and n2q2  5 then by central limit theorem, the sampling distribution
of sample proportions p 1 and p 2 are approximately normally as

44
  PQ   PQ  Large Sample Tests
p1 ~ N  P1 , 1 1  and p 2 ~ N  P2 , 2 2 
 n1   n2 

Also, by the property of normal distribution described in Unit 13 of MST-003,

the sampling distribution of the difference of sample proportions follows
normal distribution with mean
E(p1-p2) = E(p1)-E(p2) = P1-P2 … (7)
and variance
P1Q1 P2Q 2
Var(p1-p2) = Var(p 1)+Var(p2)  
n1 n2

That is,
 PQ P Q 
p1  p 2 ~ N P1  P2 , 1 1  2 2 
 n1 n2 

Thus, standard error is given by

P1Q1 P2Q 2
SE  p1  p 2   Var  p1  p 2    … (8)
n1 n2

Now, follow the same procedure as we have discussed in Section 10.2, first of
all we have to setup null and alternative hypotheses. Here, we want to test the
hypothesis about the difference of two population proportions so we can take
the null hypothesis as
 Here, 1  P1 and 
H 0 : P1  P2 (no difference in proportions)   2  P2 if we compare 
 it with general 
 procedure. 

or H 0 : P1  P2  0 (difference in two proportions is 0)

and the alternative hypothesis may be
H1 : P1  P2 for two-tailed test 

H 0 : P1  P2 and H1 : P1  P2 
or  for one-tailed test
H 0 : P1  P2 and H1 : P1  P2 

For testing the null hypothesis, the test statistic Z is given by

 p1  p 2   E  p1  p 2 
Z
SE  p1  p 2 

 p1  p2    P1  P2 
or Z  using equations (7) and (8) 
P1Q1 P2Q2

n1 n2
Since under null hypothesis we assume that P1 = P2 = P, therefore, we have

45
Testing of Hypothesis p1  p 2
Z
1 1 
PQ   
 n1 n 2 
where, Q = 1-P.
Generally, P is unknown then it is estimated by the value of pooled proportion
P̂, where
n p  n 2 p 2 X1  X 2 ˆ  1  Pˆ
Pˆ  1 1  and Q
n1  n 2 n1  n 2
After that, we calculate the value of test statistic and compare it with the
critical value(s) given in Table 10.1 at prefixed level of significance α. Take
the decision about the null hypothesis as described in Section 10.2.
Now, it is time for doing some examples for testing of hypothesis about the
difference of two population proportions.
Example 7: In a random sample of 100 persons from town A, 60 are found to
be high consumers of wheat. In another sample of 80 persons from town B, 40
are found to be high consumers of wheat. Do these data reveal a significant
difference between the proportions of high wheat consumers in town A and
town B ( at α = 0.05 )?
Solution: Here, attribute under study is high consuming of wheat. And we
define our success and failure as getting a person of high consumer of wheat
and not high consumer of wheat respectively.
We are given that
n1 = total number of persons in the sample of town A = 100
n2 = total number of persons in the sample of town B = 80
X1 = number of persons of high consumer of wheat in town A = 60
X2 = number of persons of high consumer of wheat in town B = 40
The sample proportion of high wheat consumers in town A is
X1 60
p1    0.60
n1 100
and the sample proportion of wheat consumers in town B is
X 2 40
p2    0.50
n 2 80
Here, we want to test that the proportion of high consumers of wheat in two
towns, say, P1 and P2, is not same. So our claim is P1 ≠ P2 and its complement
is P1 = P2. Since the complement contains the equality sign, so we can take the
complement as the null hypothesis and the claim as the alternative hypothesis.
Thus,
H 0 : P1  P2  P and H 1 : P1  P2

Since the alternative hypothesis is two-tailed so the test is two-tailed test.

Before proceeding further, first we have to check whether the condition of
normality meets or not.

46
 n1p1  100  0.60  60  5, n1q1  100  0.40  40  5 Large Sample Tests

n 2 p2  80  0.50  40  5, n 2q 2  80  0.50  40  5
We see that condition of normality meets, so we can go for Z-test.
The estimate of the combined proportion (P) of high wheat consumers in two
towns is given by
n1p1  n 2p2 X1  X 2 60  40 5
P̂    
n1  n 2 n1  n 2 100  80 9

ˆ  1  Pˆ  1  5  4
Q
9 9
For testing the null hypothesis, the test statistic Z is given by
p1  p 2
Z
ˆ  1  1 
P̂Q
 n1 n 2 
0.60  0.50 0.10
   1.34
5 4 1 1  0.0745
 
9 9  100 80 
The critical values for two-tailed test at 5% level of significance are ± zα/2
= ± z0.025 = ±1.96.
Since calculated value of Z (=1.34) is less than the critical value (= 1.96) and
greater than critical value (= −1.96), that means calculated value of Z lies in
non-rejection region, so we do not reject the null hypothesis and reject the
alternative hypothesis i.e. we reject the claim.
Decision according to p-value:
Since the test is two-tailed, therefore
p-value = 2 P  Z  z   2P  Z  1.34

 2 0.5  P  0  Z  1.34  2  0.5  0.4099   0.1802

Since p-value (= 0.1802) is greater than  (  0.05) so we do not reject the null
hypothesis at 5% level of significance.
Thus, we conclude that the samples provide us the sufficient evidence against
the claim so we may assume that the proportion of high consumers of wheat in
two towns A and B is same.
Example 8: A machine produced 60 defective articles in a batch of 400. After
overhauling it produced 30 defective in a batch of 300. Has the machine
improved due to overhauling? (Take  = 0.01).
Solution: Here, the machine produced articles and attribute under study is
defectiveness. And we define our success and failure as getting a defective or
non defective article. Therefore, we are given that
X1 = number of defective articles produced by the machine before overhauling
= 60
X2 = number of defective articles produced by the machine after overhauling
= 30

47
Testing of Hypothesis and n1  400, n 2  300,
Let p1 = Observed proportion of defective articles in the sample before the
overhauling
X1 60
   0.15
n1 400
and p2 = Observed proportion of defective articles in the sample after the
overhauling
X2 30
   0.10
n 2 300
Here, we want to test that machine improved due to overhauling that means the
proportion of defective articles is less after overhauling. If P1 and P2 denote the
proportion defectives before and after the overhauling the machine so our claim
is P1 > P2 and its complement P1 ≤ P2. Since the complement contains the
equality sign so we can take the complement as the null hypothesis and claim
as the alternative hypothesis. Thus,
H 0 : P1  P2 and H1 : P1  P2
Since the alternative hypothesis is right-tailed so the test is right-tailed test.
Since P is unknown, so the pooled estimate of proportion is given by
X1  X 2 60  30 90 9 ˆ  1  Pˆ  1  9  61 .
P̂     and Q
n1  n 2 400  300 700 70 70 70
Before proceeding further, first we have to check whether the condition of
normality meets or not.
 n1p1  400  0.15  60  5, n1q1  400  0.85  340  5
n 2 p2  300  0.10  30  5, n 2q 2  300  0.90  270  5
We see that condition of normality meets, so we can go for Z-test.
For testing the null hypothesis, the statistic is given by
p1  p 2
Z
ˆ  1  1 
P̂Q
 n1 n 2 
0.15  0.10 0.05
   1.95
9 61  1 1  0.0256
 
70 70  400 300 
The critical value for right-tailed test at 1% level of significance is
zα = z0.01 = 2.33.
Since calculated value of Z (= 1.95) is less than the critical value (= 2.33) that
means calculated value of Z lies in non-rejection region, so we do not reject the
null hypothesis and reject the alternative hypothesis i.e. we reject the claim at
1% level of significance.
Decision according to p-value:
Since the test is right-tailed, therefore,
p-value = P Z  z  P Z  1.95

48
  0.5  P 0  Z  1.95  0.5  0.4744  0.0256 Large Sample Tests

Since p-value (= 0.0256) is greater than  (  0.01) so we do not reject the null
hypothesis at1% level of significance.
Thus, we conclude that the samples provide us sufficient evidence against the
claim so the machine has not been improved after overhauling.
Now, you can try the following exercises.
E10) The proportions of literates between groups of people of two districts A
and B are tested. Out of the 100 persons selected at random from each
district, 50 from district A and 40 from district B are found literates. Test
whether the proportion of literate persons in two districts A and B is
same at 1% level of significance?
E11) In a large population 30% of a random sample of 1200 persons had blue-
eyes and 20% of a random sample of 900 persons had the same blue-
eyes in another population. Test the proportion of blue-eyes persons is
same in two populations at 5% level of significance.

10.7 TESTING OF HYPOTHESIS FOR

POPULATION VARIANCE USING Z-TEST
In Section 10.3, we have discussed testing of hypothesis for population mean
but when analysing quantitative data, it is often important to draw conclusion
about the average as well as the variability of a characteristic of under study.
For example, a company manufactured the electric bulbs and the manager of
the company would probably be interested in determining the average life of
the bulbs and also determining whether or not the variability in the life of bulbs
is within acceptable limits, the product controller of a milk company may be
interested to know variance of the amount of fat in the whole milk processed
by the company is no more than the specified level, etc. So we require a test for
this purpose.
The procedure of testing a hypothesis for population variance or standard
deviation is similar to the testing of population mean.
For testing a hypothesis about the population variance, we draw a random
sample X 1 , X 2 ,..., X n of size n  30 from the population with mean  and
variance σ2 where,  be known or unknown.
We know that by central limit theorem that sample variance is asymptotically
normally distributed with mean σ2 and variance 2σ4/n whether parent
population is normal or non-normal. That is, if S2 is the sample variance of
the random sample then
2σ 4
E(S2 )  σ 2 and Var(S2 ) = … (9)
n

But we know that standard error = Variance

2 2
 SE  S2   Var  S2   σ … (10)
n
The general procedure of this test is explained in the next page.
49
Testing of Hypothesis As we are doing so far in all tests, first Step in hypothesis testing problems is to
setup null and alternative hypotheses. Here, we want to test the hypothesis
specified value 20 of the population variance 2 so we can take our null and
alternative hypotheses as

H 0 : 2  02 and H1 : 2  02 for two-tailed test 

H0 : 2  02 and H1 : 2  02 
or  for one-tailed test 
H0 : 2  02 and H1 : 2  02 

For testing the null hypothesis, the test statistic Z is given by

S2  E  S2 
Z ~ N  0,1 
SE  S2 

S2  σ20  Usingequations(9) and(10) and 

Z 2 2
2  under H0 : σ  σ0 
σ02
n
After that, we calculate the value of test statistic and compare it with the
critical value given in Table 10.1 at prefixed level of significance α. Take the
decision about the null hypothesis as described in Section 10.2.
Note 2: When population under study is normal then for testing the hypothesis
about population variance or population standard deviation we use chi-square
test which will be discussed in Unit 12 of this course. Whereas when the
distribution of the population under study is not known and sample size is large
then we apply Z-test as discussed above.
Now, it is time to do example based on above test.
Example 9: A random sample of size 65 screws is taken from a population of
big box of screws and measured their length (in mm) which gives sample
variance 9.0. Test that the two years old population variance 10.5 is still
maintained at present at 5% level of significance.
Solution: We are given that
n  65, S2  9.0, 20  10.5
Here, we want to test that the two years old screw length population variance
(σ2) is still maintained at 10.5. So our claim is σ2 = 10.5 and its complement is
σ2 ≠ 10.5. Since the claim contains the equality sign so we can take the claim as
the null hypothesis and complement as the alternative hypothesis. Thus,
H 0 : 2  02  10.5 and H1 : 2  10.5
Since the alternative hypothesis is two-tailed so the test is two-tailed test.
Here, the distribution of population under study is not known and sample size
is large (n > 30) so we can go for Z-test.
For testing the null hypothesis, the test statistic Z is given by
S2  σ20
Z ~ N  0,1 
2 2
σ0
n
50
 9.0  10.5  1.5 1.5 Large Sample Tests
    0.81
2 10.5  0.175 1.84
10.5
65
The critical values for two-tailed test at 5% level of significance are
± zα/2 = ± z0.025 = ±1.96.
Since calculated value of Z (= −0.81) is less than critical value (= 1.96) and
greater than the critical value (= −1.96), that means it lies in non-rejection
region, so we do not reject the null hypothesis i.e. we support the claim.
Thus, we conclude that sample fails to provide us sufficient evidence against
the claim so we may assume that two years old screw length population
variance is still maintained at 10.5mm.
Now, you can try the following exercise.
E12) A random sample of size 120 bulbs is taken from a lot which gives the
standard deviation of the life of electric bulbs 7 hours. Test the standard
deviation of the life of bulbs of the lot is 6 hours at 5% level of
significance.

10.8 TESTING OF HYPOTHESIS FOR TWO

POPULATION VARIANCES USING Z-TEST
In previous section, we have discussed testing of hypothesis about the
population variance. But there are so many situations where we want to test the
hypothesis about equality of two population variances or standard deviations.
For example, an economist may want to test whether the variability in incomes
differ in two populations, a quality controller may want to test whether the
quality of the product is changing over time, etc.
Let there be two populations, say, population-I and population-II under study.
Also let 1, 2 and 12 , 22 denote the means and variances of population-I and
population-II respectively where both 12 and 22 are unknown but 1 and  2 may
be known or unknown. For testing the hypothesis about equality of two
population variances or standard deviations, we draw a random sample of large
size n1 from population-I and a random sample of large size n2 from
population-II. Let S12 and S22 be the sample variances of the samples selected
from population-I and population-II respectively.
These two populations may or may not be normal but according to the central
limit theorem, the sampling distribution of difference of two large sample
variances asymptotically normally distributed with mean (σ12  σ 22 ) and
variance (2σ14 / n1  2σ24 / n2 ) .
Thus,
E S12  S22   E S12   E S22   12  22 … (11)

and

214 224
Var S12  S22   Var S12   Var S22   
n1 n2

51
Testing of Hypothesis But we know that standard error = Variance

2 14 2  42
 SE S12  S22   Var  S12  S22    … (12)
n1 n2

Now, follow the same procedure as we have discussed in Section 10.2, that is,
first of all we have to setup null and alternative hypothesis. Here, we want to
test the hypothesis about the two population variances, so we can take our null
and alternative hypotheses as
H 0 : 12  22  2 and H1 : 12  22 for two-tailed test 
H 0 : 12  22 and H1 : 12  22 
or  for one-tailed test 
H 0 : 12  22 and H1 : 12  22 

For testing the null hypothesis, the test statistic Z is given by

 S12  S22   E  S12  S22  ~ N 0,1
Z  
SE  S12  S22 

or
 S12  S22    σ12  σ 22 
Z  using equations (11) and (12) 
2σ14 2σ 42

n1 n2

Since under null hypothesis we assume that σ12  σ22  σ2 , therefore, we have

S12  S22
Z ~ N  0,1 
 1 1 
σ2 2  
 n1 n 2 
Generally, population variances σ12 and σ 22 are unknown, so we estimate them
by their corresponding sample variances S12 and S 22 as

ˆ 12  S12 and ˆ 22  S 22
Thus, the test statistic Z is given by
S12  S22
Z ~ N  0,1
 2S14 2S42 
 n  n 
 1 2 

After that, we calculate the value of test statistic as may be the case and
compare it with the critical value given in Table 10.1 at prefixed level of
significance α. Take the decision about the null hypothesis as described in
Section 10.2.
Note 3: When populations under study are normal then for testing the
hypothesis about equality of population variances we use F- test which will be
discussed in Unit 12 of this course. Whereas when the form of the populations
under study is not known and sample sizes are large then we apply Z-test as
discussed above.
Now, it is time to do an example based on above test.

52
Example 10: A comparative study of variation in weights (in pound) of Army- Large Sample Tests
soldiers and Navy- sailors was made. The sample variance of the weight of 120
soldiers was 60 pound2 and the sample variance of the weight of 160 sailors
was 70 pound2. Test whether the soldiers and sailors have equal variation in
their weights. Use 5% level of significance.

Solution: Given that

n1  120, S12  60, n 2  160 , S22  70

We want to test that the Army-soldiers and Navy-sailors have equal variation
in their weights. If 12 and 22 denote the variances in the weight of Army-
soldiers and Navy-sailors so our claim is 12  22 and its complement is
12  22 . Since the claim contains the equality sign so we can take the claim as
the null hypothesis and complement as the alternative hypothesis. Thus,

H 0 : 12  22  Army-soldiers and Navy-sailors 

 have equal variation in their weights 

and the alternative hypothesis as

H1 : 12   22  Army-soldiers and Navy-sailors 

 have different variation in their weights 
Here, the distributions of populations under study are not known and sample
sizes are large  n1  120  30, n 2  160  30  so we can go for Z-test.

Since population variances are unknown so for testing the null hypothesis, the
test statistic Z is given by
S12  S22
Z
 2S14 2S24 
 n  n 
 1 2 

60  70

2 2
2   60  2   70 

120 160
10 10
   0.91
60.0  61.25 11.01

The critical values for two-tailed test at 5% level of significance are

± zα/2 = ± z0.025 = ±1.96.
Since calculated value of Z (= −0.91) is less than critical value (= 1.96) and
greater than the critical value (= −1.96), that means it lies in non-rejection
region, so we do not reject the null hypothesis i.e. we support the claim.
Thus, we conclude that samples fail to provide us sufficient evidence against
the claim so we may assume that the Army-soldiers and Navy-sailors have
equal variation in their weights.
Now, you can try the following exercise.

53
Testing of Hypothesis E 13) Two sources of raw materials of bulbs are under consideration by a bulb
manufacturing company. Both sources seem to have similar
characteristics but the company is not sure about their respective
uniformity. A sample of 52 lots from source A yields variance 25 and a
sample of 40 lots from source B yields variance of 12. Test whether the
variance of source A significantly differs to the variances of source B at
 = 0.05?
We now end this unit by giving a summary of what we have covered in it.

10.9 SUMMARY
In this unit we have covered the following points:
1. How to judge a given situation whether we should go for large sample test
or not.
2. Applying the Z-test for testing the hypothesis about the population mean
and difference of two population means.
3. Applying the Z-test for testing the hypothesis about the population
proportion and difference of two population proportions.
4. Applying the Z-test for testing the hypothesis about the population variance
and two population variances.

10.10 SOLUTIONS / ANSWERS

E1) Since we have a rule that if the observed value of test statistic lies in
rejection region then we reject the null hypothesis and if calculated
value of test statistic lies in non-rejection region then we do not reject
the null hypothesis. Therefore in our case, we do not reject the null
hypothesis. So (iii) is the correct answer. Remember always on the
basis of the one sample we never accept the null hypothesis.
E2) Since the test is two-tailed therefore rejection region will lie under both
tails.
E3) Since test is two-tailed, therefore,

p-value = 2P  Z  z   2P  Z  2.42

 2 0.5  P  0  Z  2.42  2  0.5  0.4922   0.0156

E4) We are given that

n  900, X  3.4 cm, μ 0  3.25 cm and σ  2.61 cm
Here, we wish to test that the sample comes from a large population of
bolts with mean (µ) 3.25cm. So our claim is µ = 3.25cm and its
complement is µ ≠ 3.25cm. Since the claim contains the equality sign
so we can take the claim as the null hypothesis and the complement as
the alternative hypothesis. Thus,
H0 : µ  µ0  3.25 and H1 : µ  3.25
Since the alternative hypothesis is two-tailed, so the test is two-tailed
test.
54
 Here, we want to test the hypothesis regarding population mean when Large Sample Tests
population SD is unknown, so we should use t-test if the population of
bolts known to be normal. But it is not the case. Since the sample size is
large (n > 30) so we can go for Z-test instead of t-test as an
approximate. So test statistic is given by
X  0
Z
/ n
3.40  3.25 0.15
   1.72
2.61/ 900 0.087
The critical (tabulated) values for two-tailed test at 5% level of
significance are ± zα/2 = ± z0.025 = ± 1.96.
Since calculated value of test statistic Z (= 1.72) is less than the critical
value (= 1.96) and greater than critical value (= −1.96), that means it
lies in non-rejection region, so we do not reject the null hypothesis i.e.
we support the claim at 5% level of significance.
Thus, we conclude that sample does not provide us sufficient evidence
against the claim so we may assume that the sample comes from the
population of bolts with mean 3.25cm.
E5) Here, we given that
µ 0  1200, n  100, X  1220, S  90
Here, the company may accept the new CFL light when average life of
CFL light is greater than 1200 hours. So the company wants to test that
the new brand CFL light has an average life greater than 1200 hours. So
our claim is  > 1200 and its complement is  ≤ 1200. Since
complement contains the equality sign so we can take the complement
as the null hypothesis and the claim as the alternative hypothesis. Thus,
H0 : µ  µ0  1200 and H1 : µ  1200
Since the alternative hypothesis is right-tailed so the test is right-tailed
test.
Here, we want to test the hypothesis regarding population mean when
population SD is unknown, so we should use t-test if the distribution of
life of bulbs known to be normal. But it is not the case. Since the
sample size is large (n > 30) so we can go for Z-test instead of t-test.
Therefore, test statistic is given by
X  0
Z
S/ n
1220  1200 20
   2.22
90/ 100 9
The critical values for right-tailed test at 5% level of significance is
zα = z0.05 = 1.645.
Since calculated value of test statistic Z (= 2.22) is greater than critical
value (= 1.645), that means it lies in rejection region so we reject the
null hypothesis and support the alternative hypothesis i.e. we support
our claim at 5% level of significance.
55
Testing of Hypothesis Thus, we conclude that sample does not provide us sufficient evidence
against the claim so we may assume that the company accepts the new
brand of bulbs.
E6) Given that
n1  200, X  1300, S1  41;

n 2  200, Y  1280, S2  46
Here, we want to test that there is significant difference in the mean
duration of their lives of two brands of electric bulbs. If 1 and 2
denote the mean lives of two brands of electric bulbs respectively then
our claim is 1 ≠ 2 and its complement is 1 = 2. Since the
complement contains the equality sign so we can take the complement
as the null hypothesis and the claim as the alternative hypothesis. Thus,
H 0 : 1   2 and H1 : 1   2
Since the alternative hypothesis is two-tailed so the test is two-tailed
test.
We want to test the null hypothesis regarding equality of two
population means. The standard deviations of both populations are
unknown so we should go for t-test if population of difference is known
to be normal. But it is not the case. Since sample sizes are large (n1, and
n2 > 30) so we go for Z-test.
So for testing the null hypothesis, the test statistic Z is given by
XY
Z
S12 S22

n1 n 2
1300  1280 20 20
    4.59
 41
2
 46
2
8.41  10.58 4.36

200 200
The critical (tabulated) values for two-tailed test at 1% level of
significance are ± zα/2 = ± z0.005 = ± 2.58.
Since calculated value of test statistic Z (= 4.59) is greater than the
critical values (= ± 2.58), that means it lies in rejection region, so we
reject the null hypothesis an support the alternative hypothesis i.e.
support the claim at 1% level of significance.
Thus, we conclude that samples do not provide us sufficient evidence
against the claim so there is significant difference in the mean duration
of their lives of two brands of electric bulbs.
E7) Given that
n1  50, X  8.3, S1  1.2;

n 2  100 , Y  8.0, S2  1.5

Here, we want to test that the first drug provides a significant longer
period of relief than the other. If 1 and 2 denote the mean relief time
due to first and second drugs respectively then our claim is 1 > 2 and
56
 its complement is 1 ≤ 2. Since complement contains the equality sign Large Sample Tests
so we can take the complement as the null hypothesis and the claim as
the alternative hypothesis. Thus,
H 0 : 1   2 and H1 : 1   2
Since the alternative hypothesis is right-tailed so the test is right-tailed
test.
We want to test the null hypothesis regarding equality of two
population means. The standard deviations of both populations are
unknown. So we should go for t-test if population of difference is
known to be normal. But it is not the case. Since sample sizes are large
(n1, and n2 > 30) so we go for Z-test.
So for testing the null hypothesis, the test statistic Z is given by
XY
Z
S12 S22

n1 n 2

8.3  8.0 0.3

 2 2

 1.2   1.5  0.0288  0.0255

50 100
0.3
  1.32
0.2265
The critical (tabulated) value for right-tailed test at 5% level of
significance is zα = z0.05 = 1.645.
Since calculated value of test statistic Z (= 1.32) is less than the critical
value (=1.645), that means it lies in non-rejection region, so we do not
reject the null hypothesis and reject the alternative hypothesis i.e. we
reject the claim at 5% level of significance.
Thus, we conclude that samples provide us sufficient evidence against
the claim so the first drug does not has longer period of relief than the
other.
E8) Here, students are classified as Science background and other. We
define our success and failure as getting student of Science background
and other respectively. We are given that
n = Total number of students is the sample = 100
X = Number of students from Science background = 54
p = Sample proportion of students from Science background
54
  0.54
100
We want to test whether 50% of the students are from Science
background in MSc. If P denotes the proportion of first year Science
background students in the University. So our claim is P = P0 = 0.5 and
its complement is P ≠ 0.5. Since the claim contains the equality sign so
we can take the claim as the null hypothesis and complement as the
alternative hypothesis. Thus,
57
Testing of Hypothesis H0 = P = P0 = 0.5 (= 50%)
H1 : P ≠ 0.5 [Science background differs to 50%]
Since the alternative hypothesis is two-tailed so the test is two-tailed
test.
Before proceeding further, first we have to check whether the condition
of normality meets or not.
 np  100  0.54  54  5
nq  100   1  0.54   100  0.46  46  5

We see that condition of normality meets, so we can go for Z-test.

For testing the null hypothesis, the test statistic Z is given by
p  P0 0.54  0.50
Z   Q 0  1  P0 
P0Q 0 0.5  0.5 /100
n
0.04
  0.80
0.05
The critical (tabulated) values for two-tailed test at 1% level of
significance are ± zα/2 = ± z0.005 = ± 2.58.
Since calculated value of test statistic Z (= 0.80) is less than the critical
value (= 2.58) and greater than critical value (= −2.58), that means it
lies in non-rejection region, so we do not reject the null hypothesis i.e.
we support the claim at 1% level of significance.
Thus, we conclude that sample fails to provide us sufficient evidence
against the claim so we may assume that 50% of the first year students
in MSc. Economics in the University are from Science background.
E9) We define our success and failure as a patient is survived and not
survived. Here, we are given that
n = 200
X = Number of survived patients who are given a particular injection
= 180
p = Sample proportion of survived patients who are given a particular
injection
X 180
   0.9
n 200
80 80
P0  80%   0.80  Q 0  1  P0   0.20
100 100
Here, we want to test that the survival rate of the patients is more than
80%. If P denotes the proportion of survival patients then our claim is P
> 0.80 and its complement is P ≤ 0.80. Since complement contains the
equality sign so we can take the complement as the null hypothesis and
the claim as the alternative hypothesis. Thus,
H 0 : P  P0  0.80 and H1 : P  0.80

58
 Since the alternative hypothesis is right-tailed so the test is right-tailed Large Sample Tests
test.
Before proceeding further, first we have to check whether the condition
of normality meets or not.
 np  200  0.9  180  5

nq  200   1  0.9   200  0.1  20  5

We see that condition of normality meets, so we can go for Z-test.
For testing the null hypothesis, the test statistic Z is given by
p  P0
Z
P0 Q 0
n
0.9  0.8 0.1
   3.53
 0.8  0.2  0.0283
200
The critical (tabulated) value for right-tailed test at 5% level of
significance is zα = z0.05 = 1.645.
Since calculated value of test statistic Z (= 3.53) is greater than the
critical value (=1.645), that means it lies in rejection region, so we
reject the null hypothesis and support the alternative hypothesis i.e.
support our claim at 5% level of significance.
Thus, we conclude that sample fails to provide us sufficient evidence
against the claim so we may assume that the survival rate is greater than
80% in the population using that injection.
E10) Let X1 and X2 stand for number of literates in districts A and B
respectively. Therefore, we are given that
X1 50
n1  100, X1  50  p1    0.50
n1 100
X 40
n 2  100, X 2  40  p 2  2   0.40
n 2 100
Here, we want to test whether the proportion of literate persons in two
districts A and B is same. If P1 and P2 denote the proportions of literate
persons in two districts A and B respectively then our claim is P1 = P2
and its complement P1 ≠ P2. Since the claim contains the equality sign
so we can take the claim as the null hypothesis and complement as the
alternative hypothesis. Thus,
H 0 : P1  P2  P and H1 : P1  P2

Since the alternative hypothesis is two-tailed so the test is two tailed

test.
The estimate of the combined proportion (P) of literates in districts A
and B is given by
n1p1  n 2 p2 X1  X 2 50  40
P̂     0.45
n1  n 2 n1  n 2 100  100
ˆ  1  Pˆ  1  0.45  0.55
Q
59
Testing of Hypothesis Before proceeding further, first we have to check whether the condition
of normality meets or not.
 n1p1  100  0.50  50  5, n1q1  100  0.50  50  5
n 2 p2  100  0.40  40  5, n 2q 2  100  0.60  60  5
We see that condition of normality meets, so we can go for Z-test.
For testing the null hypothesis, the test statistic Z is given by
p1  p 2
Z
ˆ  1  1 
P̂Q
 n1 n 2 
0.50  0.40 0.10
   1.42
1 1  0.0704
0.45  0.55   
 100 100 
The critical (tabulated) values for two-tailed test at 1% level of
significance are ± zα/2 = ± z0.005 = ± 2.58.
Since calculated value of test statistic Z (= 1.42) is less than the critical
value (= 2.58) and greater than critical value (= −2.58), that means it
lies in non-rejection region, so we do not reject the null hypothesis i.e.
we support our claim at 1% level of significance.
Thus, we conclude that samples fail to provide us sufficient evidence
against the claim so we may assume that the proportion of literates in
districts A and B is equal.
E11) Here, we are given that
n1  1200, p1  30%  0.30

n 2  900, p2  20%  0.20

Here, we want to test that the proportion of blue-eye persons in both the
population is same. If P1 and P2 denote the proportions of blue-eye
persons in two populations respectively then our claim is P1 = P2 and its
complement P1 ≠ P2. Since the claim contains the equality sign so we
can take the claim as the null hypothesis and complement as the
alternative hypothesis. Thus,
H 0 : P1  P2  P and H1 : P1  P2

Since the alternative hypothesis is two-tailed so the test is two tailed

test.
The estimate of the combined proportion (P) of literates in districts A
and B is given by

n1p1  n 2 p2 1200  0.30  900  0.20

P̂    0.257
n1  n 2 1200  900
ˆ  1  Pˆ  1  0.257  0.743
Q

Before proceeding further, first we have to check whether the condition

of normality meets or not.
60
  n1p1  1200  0.30  360  5, n1q1  1200  0.70  840  5 Large Sample Tests

n 2p2  900  0.20  180  5, n 2q 2  900  0.80  720  5

We see that condition of normality meets, so we can go for Z-test.
For testing the null hypothesis, the test statistic Z is given by
p1  p 2
Z
ˆ  1  1 
P̂Q
 n1 n 2 
0.30  0.20 0.10
   5.26
 1 1  0.019
0.257  0.743   
 1200 900 
The critical (tabulated) values for two-tailed test at 5% level of
significance are ± zα/2 = ± z0.005 = ± 1.96.
Since calculated value of test statistic Z (= 5.26) is greater than critical
values (= ±1.96), that means it lies in rejection region, so we reject the
null hypothesis i.e. we reject our claim at 5% level of significance.
Thus, we conclude that samples provide us sufficient evidence against
the claim so the proportion of blue-eyed person in both the population
is not same.
E12) Here, we are given that
n  120, S  7, 0  6
Here, we want to test that standard deviation (σ) of the life of bulbs of
the lot is 6 hours. So our claim is σ = 6 and its complement is σ ≠ 6.
Since the claim contains the equality sign so we can take the claim as
the null hypothesis and complement as the alternative hypothesis. Thus,
H 0 :   0  6 and H1 :   6
Since the alternative hypothesis is two-tailed so the test is two-tailed
test.
Here, the distribution of population under study is not known and
sample size is large (n > 30) so we can go for Z-test.
For testing the null hypothesis, the test statistic Z is given by
S2  σ02
Z ~ N  0,1 
2
σ02
n
2 2


 7  6 
13

13
 2.80
2 2 36  0.129 4.64
6
120
The critical values for two-tailed test at 5% level of significance are
± zα/2 = ± z0.025 = ±1.96.
Since calculated value of Z (= 2.8) is greater than critical values
(= ±1.96), that means it lies in rejection region, so we reject the null
hypothesis i.e. we reject our claim at 5% level of significance.

61
Testing of Hypothesis Thus, we conclude that sample provides us sufficient evidence against
the claim so standard deviation of the life of bulbs of the lot is not 6.0
hours.
E13) Here, we are given that
n1  52, S12  25
n2  40, S22  12
Here, we want to test that variance of source A significantly differs to
the variances of source B. If 12 and 22 denote the variances in the raw
materials of sources A and B respectively so our claim is 12  22 and
its complement is 12   22 . Since complement contains the equality
sign so we can take the complement as the null hypothesis and the
claim as the alternative hypothesis. Thus,
H0 : 12  22 and H1 : 12  22
Since the alternative hypothesis is two-tailed so the test is two-tailed
test.
Here, the distributions of populations under study are not known and
sample sizes are large (n1  52  30, n 2  40  30) so we can go for Z-
test.
Since population variances are unknown so for testing the null
hypothesis, the test statistic Z is given by
S12  S22
Z
 2S14 2S24 
 n  n 
 1 2 

25  12 13
   2.36
2
225 212
2 5.5

52 40
The critical values for two-tailed test at 5% level of significance are
± zα/2 = ± z0.025 = ±1.96.
Since calculated value of Z (= 2.36) is greater than critical values (= ±1.96),
that means it lies in rejection region, so we reject the null hypothesis and
support the alternative hypothesis i.e. we support our claim at 5% level of
significance.
Thus, we conclude that samples fail to provide us sufficient evidence against
the claim so variance of source A significantly differs to the variance of source
B.

62