Camarines Norte State College

College of Business and Public Administration

Lesson 8: Solving Hypothesis

Testing Problems

CHRIS ADAM B. YBA

Instructor
 Camarines Norte State College

Hypothesis Testing College of Business and Public Administration

Traditional Approach
 Camarines Norte State College

Hypothesis Testing College of Business and Public Administration

Traditional Approach
▪ Before we continue with the examples, let us try to have a brief introduction of the first test that we will be
using in the succeeding discussion, z test.
▪ The z test is a statistical test for the mean of population. It can be used when 𝑛 > 30, or when the population
is normally distributed and 𝜎 is known.
▪ Many hypotheses are tested using this test based on the following general formula:

𝑜𝑏𝑠𝑒𝑟𝑣𝑒𝑑 𝑉𝑎𝑙𝑢𝑒 − (𝐸𝑥𝑝𝑒𝑐𝑡𝑒𝑑 𝑉𝑎𝑙𝑢𝑒)

𝑇𝑒𝑠𝑡 𝑉𝑎𝑙𝑢𝑒 =
𝑆𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝐸𝑟𝑟𝑜𝑟

▪ Formula: where 𝑋ത = sample mean

𝑋ത − 𝜇 𝜇 = population mean
𝑧= 𝜎 = population standard deviation
𝜎Τ 𝑛
𝑛 = sample size
 Camarines Norte State College

Hypothesis Testing College of Business and Public Administration

Traditional Approach
Example 10.
A researcher wishes to see if the mean number of days that a basic, low-price, small automobile sits
on a dealer’s lot is 29 days. A sample of 30 automobile dealers has a mean of 30.1 days. At 𝛼 =
0.05, test the claim that the time is greater than 29 days. The standard deviation of the population is
3.8 days.

Solution
Given:
𝑋ത = 30.1 days
𝜇 = 29 days
𝜎 = 3.8 days
𝑛 = 30 dealers
 Camarines Norte State College

Hypothesis Testing College of Business and Public Administration

Traditional Approach
Example 10.
A researcher wishes to see if the mean number of days that a basic, low-price, small automobile sits on a
dealer’s lot is 29 days. A sample of 30 automobile dealers has a mean of 30.1 days. At 𝛼 = 0.05, test the
claim that the time is greater than 29 days. The standard deviation of the population is 3.8 days.
Solution:
Step 1: State the hypothesis and identify the claim.
𝐻0 : 𝜇 = 29 𝐻1 : 𝜇 > 29 (claim)
Step 2: Find the critical value.
Since 𝛼 = 0.05 (right-tailed), then the critical value (C.V.) 𝑧 = 1.645
Step 3: Compute for the test value.
ത
𝑋−𝜇 30.1−29
Formula: 𝑧 = Solution: 𝑧 = = 1.59
𝜎Τ 𝑛 3.8Τ 30
 Camarines Norte State College

Hypothesis Testing College of Business and Public Administration

Traditional Approach
Example 10.
A researcher wishes to see if the mean number of days that a basic, low-price, small automobile sits on a
dealer’s lot is 29 days. A sample of 30 automobile dealers has a mean of 30.1 days. At 𝛼 = 0.05, test the
claim that the time is greater than 29 days. The standard deviation of the population is 3.8 days.

Step 4: Make a decision.

Since the test value is less than the critical value of 1.645, and is not
in the critical region, the decision is not to reject the null hypothesis.

Step 5: Summarize the result.

There is no enough evidence to support the claim that the mean time
that the basic, low-price, and small automobile sits on a dealer’s lot is
greater than 29 days.
 Camarines Norte State College

Hypothesis Testing College of Business and Public Administration

Traditional Approach
Example 11.
The Medical Rehabilitation Education Foundation reports that the average cost of rehabilitation for
stroke victims is $24 672. To see if the average cost of rehabilitation is different at a particular
hospital, a researcher selects a random sample of 35 stroke victims at the hospital and finds the
average cost of their rehabilitation is $26 343. The standard deviation of the population is $3 251. At
𝛼 = 0.01, can it be concluded that the average cost of stroke rehabilitation at a particular hospital is
different from $24 672.
Solution
Given:
𝑋ത = $26 343
𝜇 = $24 672
𝜎 = $3 251
𝑛 = 35 victims
 Camarines Norte State College

Hypothesis Testing College of Business and Public Administration

Traditional Approach
Example 11.
The Medical Rehabilitation Education Foundation reports that the average cost of rehabilitation for stroke victims is $24
672. To see if the average cost of rehabilitation is different at a particular hospital, a researcher selects a random sample
of 35 stroke victims at the hospital and finds the average cost of their rehabilitation is $26 343. The standard deviation of
the population is $3 251. At 𝛼 = 0.01, can it be concluded that the average cost of stroke rehabilitation at a particular
hospital is different from $24 672.
Solution:
Step 1: State the hypothesis and identify the claim.
𝐻0 : 𝜇 = 24 672 𝐻1 : 𝜇 ≠ 26 243 (claim)
Step 2: Find the critical value.
Since 𝛼 = 0.01 (two-tailed), then the critical value (C.V.) 𝑧 = ±2.576
Step 3: Compute for the test value.
ത
𝑋−𝜇 (26 343)−(24 672)
Formula: 𝑧 = Solution: 𝑧 = = 3.04
𝜎Τ 𝑛 (3 251)Τ 35
 Camarines Norte State College

Hypothesis Testing College of Business and Public Administration

Traditional Approach
Example 11.
The Medical Rehabilitation Education Foundation reports that the average cost of rehabilitation for stroke victims is $24
672. To see if the average cost of rehabilitation is different at a particular hospital, a researcher selects a random sample
of 35 stroke victims at the hospital and finds the average cost of their rehabilitation is $26 343. The standard deviation of
the population is $3 251. At 𝛼 = 0.01, can it be concluded that the average cost of stroke rehabilitation at a particular
hospital is different from $24 672.

Step 4: Make a decision.

Since the test value is greater than the critical value of 2.576, and falls
in the critical region, the decision is to reject the null hypothesis.

Step 5: Summarize the result.

There is enough evidence to support the claim that the average cost of
rehabilitation at a particular hospital is different from $24 672.
 Camarines Norte State College

Hypothesis Testing College of Business and Public Administration

Alternative Approach (p-values)

 Camarines Norte State College

Hypothesis Testing College of Business and Public Administration

Alternative Approach (p-values)

Example 12.
A researcher wishes to test the claim that the average monthly cost of electricity bill is greater than P5 700.
She selects a random sample of 36 households and finds the mean to be P5 950. The population standard
deviation is P659. Is there an evidence to support the claim at 𝛼 = 0.05? Use p-value method.
Solution
Step 1: State the hypotheses and identify the claim.
𝐻0 : 𝜇 = 5700 𝐻1 : 𝜇 > 5700 (claim)
Step 2: Compute the test value.
ത
𝑋−𝜇 (5950)−(5700)
Formula: 𝑧 = Solution: 𝑧 = = 2.28
𝜎Τ 𝑛 (659)Τ 36
Step 3: Find the p-value.
Using the table, find the corresponding area under the normal distribution for 𝑧 = 2.28. This is,
𝐴 𝑧 < 2.28 = 0.9887 Subtracting this from 1 to find p-value, 𝑝 = 1 − 0.9887 = 0.0113.
 Camarines Norte State College

Hypothesis Testing College of Business and Public Administration

Alternative Approach (p-values)

Example 12.
A researcher wishes to test the claim that the average monthly cost of electricity bill is greater than
P5 700. She selects a random sample of 36 households and finds the mean to be P5 950. The
population standard deviation is P659. Is there an evidence to support the claim at 𝛼 = 0.05? Use p-
value method.
Step 4: Make a decision.
Since the p-value is less than 𝛼 = 0.05 , the decision is to
reject the null hypothesis.

Step 5: Summarize the result.

There is enough evidence to support the claim that the
average monthly cost of electricity bill is greater that
P5700.
 Camarines Norte State College

Hypothesis Testing College of Business and Public Administration

Alternative Approach (p-values)

Example 13.
A researcher claims that the average wind speed in a certain city is 8 miles per hour (mph). A sample of 32
days has an average wind speed of 8.2 mph. The standard deviation of the population is 0.6 mph. At 𝛼 =
0.05, is there enough evidence to reject the claim?
Solution
Step 1: State the hypotheses and identify the claim.
𝐻0 : 𝜇 = 8(claim) 𝐻1 : 𝜇 ≠ 8
Step 2: Compute the test value.
𝑋ത − 𝜇 (8.2) − (8)
𝑧= = = 1.89
𝜎Τ 𝑛 0.6Τ 32
Step 3: Find the p-value.
Using the table, find the corresponding area under the normal distribution for 𝑧 = 1.89. This is,
𝐴(𝑧 < 1.89) = 0.9706. Subtracting this from 1 to find p-value,𝑝 = 1 − 0.9706 = 0.0294. Since
his is a two-tailed test, this value must be compared to 𝛼/2 = 0.025.
 Camarines Norte State College

Hypothesis Testing College of Business and Public Administration

Alternative Approach (p-values)

Example 13.
A researcher claims that the average wind speed in a certain city is 8 miles per hour (mph). A
sample of 32 days has an average wind speed of 8.2 mph. The standard deviation of the population
is 0.6 mph. At 𝛼 = 0.05, is there enough evidence to reject the claim?
Step 4: Make a decision.
Since the p-value is greater than 𝛼 = 0.05, the decision
is not to reject the null hypothesis.

Step 5: Summarize the result.

There is enough evidence to support the claim that the
average wind speed is 8 mph.
 Camarines Norte State College

Hypothesis Testing College of Business and Public Administration

Summary
 Camarines Norte State College

Hypothesis Testing College of Business and Public Administration

Summary
 Camarines Norte State College

Hypothesis Testing College of Business and Public Administration

Thank you !!!