Hypothesis Testing Solutions

Problem 1.
Consider the following hypothesis test:

H0: mu ≤ 50
Ha: mu > 50

A sample of 60 is used and the population standard deviation is 8. Use the critical value
approach to state your conclusion for each of the following sample results. Use α = .05.

a. 𝑥 =52.5

One-Sample Z

Test of µ = 50 vs > 50
The assumed standard deviation = 8

N Mean SE Mean 95% Lower Bound Z P

60 52.50 1.03 50.80 2.42 0.008
P value < α, reject the null hypothesis

b. 𝑥 = 51

One-Sample Z

N Mean SE Mean 95% Lower Bound Z P

60 51.00 1.03 49.30 0.97 0.166

P value > α, fail to reject the null hypothesis

c. 𝑥 = 51.8

One-Sample Z

N Mean SE Mean 95% Lower Bound Z P

60 51.80 1.03 50.10 1.74 0.041
P value < α, reject the null hypothesis
Problem 2.

Because of high production-changeover time and costs, a director of manufacturing must

convince management that a proposed new manufacturing method reduces costs before
the new method can be implemented. The current production method operates with a
mean cost of $220 per hour. A research study will measure the cost of the new method over
a sample production period.

Suppose a new production method will be implemented if a hypothesis test supports the
conclusion that the new method reduces the mean operating cost per hour.

a. State the appropriate null and alternative hypotheses if the mean cost for the
current production method is $220 per hour.

H0: mu ≥ 220
Ha: mu < 220

b. What is the Type I error in this situation? What are the consequences of making this
error? (incorrect rejection of true null hypothesis)

Discussion in class

c. What is the Type II error in this situation? What are the consequences of making
this error? (not rejecting, “accepting” null hypothesis when it is not true)

Discussion in class

d. Assume that the during the research study the mean cost of the production of 100
items was $218. Assume that the standard deviation is known to be $8. Perform the
hypothesis test at alpha = 0.05. What is your conclusion?
One-Sample Z

Test of µ = 220 vs < 220

The assumed standard deviation = 8

N Mean SE Mean 95% Upper Bound Z P

100 218.000 0.800 219.316 -2.50 0.006
Problem 3.
In a study entitled “How Undergraduate Students Use Credit Cards”, it was reported that
undergraduate students have a mean credit card balance of $2,573, (creditcards.com June
2015).
This figure was an all-time high and had increased 44% over the previous five years.
Assume that a current study is being conducted to determine if it can be concluded that the
mean credit card balance for undergraduate students has continued to increase compared
to the June 2015 report. Based on previous studies, use a population standard deviation σ =
$1000.

a. State the null and alternative hypotheses.

H0: mu ≤ 2573
Ha: mu > 2573

b. What is the p-value for a sample of 40 undergraduate students with a sample mean
credit card balance of $2,825?

One-Sample Z

Test of µ = 2573 vs > 2573

The assumed standard deviation = 1000

N Mean SE Mean 95% Lower Bound Z P

40 2825 158 2565 1.59 0.055

c. Using a .05 level of significance, what is your conclusion?

Fail to reject the null hypothesis.
Problem 4. (webfile, Administrator)
The national mean annual salary for a school principal is $90,000 a year (national Center
for Education 2015). A school official took a sample of 25 school administrators in the state
of Ohio to learn about salaries in that state to see if they differed from the national average.

a. Formulate hypotheses that can be used to determine whether the population mean
annual administrator salary in Ohio differs from the national mean of $90.000.
H₀: μ = 90000
H₁: μ ≠ 90000

b. The sample data for 25 Ohio administrators in contained in the file named
Administrator. What is the p-value for your hypothesis in part a?

P-value = 0.043

c. At α = .05, can the null hypothesis be rejected? What is your conclusion?

One-Sample T: Salary
Descriptive Statistics
N Mean StDev SE Mean 95% CI for μ
25 85272 11039 2208 (80715, 89829)

d. μ: mean of Salary
Test
Null hypothesis H₀: μ = 90000
Alternative hypothesis H₁: μ ≠ 90000
T-Value P-Value
-2.14 0.043
Discussion in class
Problem 5.
At Western University the historical mean of scholarship examination scores for freshman
applications is 900. A historical population standard deviation σ =180 is assumed known.
Each year, the assistant dean uses a sample of applications to determine whether the mean
examination score for the new freshman applications has changed.

a. State the hypotheses.

H₀: μ = 900
H₁: μ ≠ 900

b. What is the 95% confidence interval estimate of the population mean examination
score if a sample of 200 applications provided a sample mean 𝑥 = 935?

One-Sample Z

The assumed standard deviation = 180

N Mean SE Mean 95% CI

200 935.0 12.7 (910.1, 959.9)

c. What is the p-value?

One-Sample Z

Test of µ = 900 vs ≠ 900

The assumed standard deviation = 180

N Mean SE Mean 95% CI Z P

200 935.0 12.7 (910.1, 959.9) 2.75 0.006

d. Using α = .05 and the information from (c) conduct a hypothesis test. What is your
conclusion?

Discussion in class
Problem 6. (webfile WeeklyPay)
A recent issue of the AARP Bulletin reported that the average weekly pay for a woman with
a high school degree is $520 (AARP Bulletin, January–February, 2016). Suppose you would
like to determine if the average weekly pay for all working women is significantly greater
than that for women with a high school degree. Data providing the weekly pay for a sample
of 50 working women are available in the file named WeeklyPay. These data are consistent
with the findings reported in the AARP article.

a. State the hypotheses that should be used to test whether the mean weekly pay
for all women is significantly greater than the mean weekly pay for women with
a high school degree.

H₀: μ = 520
H₁: μ > 520

b. Use the data in the file named WeeklyPay to compute the sample mean, the test
statistic, and the p-value.

One-Sample T: Weekly Pay

Descriptive Statistics
95% Lower Bound
N Mean StDev SE Mean for μ

50 637.9 148.5 21.0 602.7

μ: mean of Weekly Pay

Test
Null hypothesis H₀: μ = 520
Alternative hypothesis H₁: μ > 520
T-Value P-Value
5.62 0.000

c. Use α = .05. What is your conclusion?

Discussion in class
Problem 7.
Will improving customer service result in higher stock prices for the companies providing
the better service? “When a company’s satisfaction score has improved over the prior
year’s results and is above the national average (currently 75.7), studies show its shares
have a good chance of outperforming the broad stock market in the long run”
(BusinessWeek, 2015). The following satisfaction scores of three companies for the 4th
quarters of 2014 and 2015 were obtained from the American Customer Satisfaction Index.
Assume that the scores are based on a poll of 60 customers from each company. Because
the polling has been done for several years, the standard deviation can be assumed to
equal 6 points in each case.

Company 2014 Score 2015 Score

Rite Aid 73 76
Expedia 75 77
J.C. Penney 66 68
a. For Rite Aid, is the increase in the satisfaction score from 2014 to 2015 statistically
significant? Use α =.05. What can you conclude?

Two-Sample T-Test and CI

Sample N Mean StDev SE Mean

1 60 73.00 6.00 0.77
2 60 76.00 6.00 0.77

Difference = µ (1) - µ (2)

Estimate for difference: -3.00
95% upper bound for difference: -1.18
T-Test of difference = 0 (vs <): T-Value = -2.74 P-Value = 0.004 DF = 118

b. Can you conclude that the 2015 score for Rite Aid is above the national average of
75.7? Use α = .05.
One-Sample Z

Test of µ = 75.7 vs > 75.7

The assumed standard deviation = 6

N Mean SE Mean 95% Lower Bound Z P

60 76.000 0.775 74.726 0.39 0.349
 c. For Expedia, is the increase from 2014 to 2015 statistically significant? Use α =.05.

Two-Sample T-Test and CI

Sample N Mean StDev SE Mean

1 60 75.00 6.00 0.77
2 60 77.00 6.00 0.77

Difference = µ (1) - µ (2)

Estimate for difference: -2.00
95% upper bound for difference: -0.18
T-Test of difference = 0 (vs <): T-Value = -1.83 P-Value = 0.035 DF = 118

d. Perform a hypothesis test to check whether the difference for J.C. Penney
satisfaction score is statistically significant.

Two-Sample T-Test and CI

Sample N Mean StDev SE Mean

1 60 66.00 6.00 0.77
2 60 68.00 6.00 0.77

Difference = µ (1) - µ (2)

Estimate for difference: -2.00
95% CI for difference: (-4.17, 0.17)
T-Test of difference = 0 (vs ≠): T-Value = -1.83 P-Value = 0.070 DF = 118

Problem 8. (Chapter 10)

Results of the 2016 Zagat Fast-Food Survey show Americans eat an average of 6.3 meals
per month in fast-food chains. Suppose that in a follow-up study of 45 consumers in
Oklahoma City and 55 consumers in Milwaukee you obtain the following results:

Oklahoma City Milwaukee

n1=45 n2=55
𝑥1 = 56.1 𝑥2 = 59.4

s1= 6.0 s2= 7.0

a. Formulate a hypothesis so that, if the null hypothesis is rejected, we can conclude

that the number of meals eaten at fast-food chains by consumers in Oklahoma City is
significantly less than the number of meals eaten at fast-food chains by consumers
in Milwaukee.

H0: µ(O) - µ(M)≥0

H1: µ(O) - µ(M)<0
 b. What is the value of the test statistic?
T-Value = -2.54

c. What is the p-value?

d.
54 P-Value = 0.006
Two-Sample T-Test and CI

Sample N Mean StDev SE Mean

1 45 56.10 6.00 0.89
2 55 59.40 7.00 0.94

Difference = µ (1) - µ (2)

Estimate for difference: -3.30
95% upper bound for difference: -1.14
T-Test of difference = 0 (vs <): T-Value = -2.54 P-Value = 0.006 DF = 97

e. Using α =.05, what is your conclusion?

Discussion in class

Problem 9. (Chapter 10) (webfile, SATMath)

The College Board provided comparisons of SAT scores based on the highest level of
education attained by the test taker’s parents. A research hypothesis was that students
whose parents had attained a higher level of education would on average score higher on
the SAT. The overall mean SAT math score is 514 (College Board website, January 8, 2017).
SAT math scores for independent samples of students follow. The first sample shows the
SAT math test scores for students whose parents are college graduates with a bachelor’s
degree. The second sample shows the SAT math test scores for students whose parents are
high school graduates but do not have a college degree.

Student’s Parents
College Grads High School Grads
485 487 442 492
534 533 580 478
650 526 479 425
554 410 486 485
550 515 528 390
572 578 524 535
497 448
592 469
 a. Formulate the hypotheses that can be used to determine whether the sample data
support the hypothesis that students show a higher population mean math score on
the SAT if their parents attained a higher level of education.

H0: µ(C) - µ(H)≤0

H1: µ(C) - µ(H)>0

b. What is the point estimate of the difference between the means for the two
populations?
D=38

c. Compute the p-value for the hypothesis test.

P value = 0.042

d. At α = .05, what is your conclusion?

Discussion in class

Two-Sample T-Test and CI: College, High School

Method
μ₁: mean of College
µ₂: mean of High School
Difference: μ₁ - µ₂
Equal variances are not assumed for this analysis.

Descriptive Statistics
SE
Sample N Mean StDev Mean

College 16 525.0 59.4 15

High School 12 487.0 51.7 15

Estimation for Difference

95% Lower Bound
Difference for Difference
 38.0 2.0

Test

Null hypothesis H₀: μ₁ - µ₂ = 0

Alternative hypothesis H₁: μ₁ - µ₂ > 0
T-Value DF P-Value
1.80 25 0.042