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Examples-Hypothesis testing (1)

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5 views

Examples-Hypothesis testing (1)

Uploaded by

Aishwarya mohan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Examples

1. An agency based out of Bangalore claimed that the average monthly disposable
income of families living in Bangalore is greater than INR 4200 with a standard
deviation of INR 3200. From a random sample of 40,000 families, the average
disposable income was estimated as INR 4250. Assume that the population
standard deviation is INR 3200. Conduct an appropriate hypothesis test at 95%
confidence level (a = 0.05) to check the validity of the claim by the agency.

2. A passport office claims that the passport applications are processed within 30
days of submitting the application form and all necessary documents. Table
below shows processing time of 40 passport applicants. The population standard
deviation of the processing time is 12.5 days. Conduct a hypothesis test at
significance level a = 0.05 to verify the claim made by the passport office.

16 16 30 37 25 22 19 35 27 32
34 28 24 35 24 21 32 29 24 35
28 29 18 31 28 33 32 24 25 22
21 27 41 23 23 16 24 38 26 28

3. According to the company IQ Research, the average Intelligence Quotient (IQ) of


Indians is 82 derived based on a research carried out by Professor Richard Lynn,
a British Professor of Psychology, using data collected from 2002 to 2006
(Source: IQ Research1). The population standard deviation of IQ is estimated as
11.03. Based on a sample of 100 people from India, the sample IQ was estimated
as 84.

(a) Conduct an appropriate hypothesis test at a = 0.05 to validate the claim of IQ


Research (that average IQ of Indians is 82).

Questions

A. What is the claim in problems


1. …
2. …
3. ….
B. Whether it is one tailed (Left or Right) or two-tailed test
1. …..
2. …..
3. ….

Problem 1

Claim: Average disposable income is more than INR 4200.


Let µ and s denote the mean and standard deviation in the population. The corresponding
null and alternative hypotheses are
H0: µ £ 4200
HA: µ > 4200
Since we know the population standard deviation, we can use the Z-test. The corresponding
Z-statistic is given by

X -µ 4250 - 4200
Z = = = 3.125
s/ n 3200 / 40000

Right Tailed test


The corresponding Z-critical value at a = 0.05 for right-tailed test = NOMRSINV(1 - a)

Since the calculated Z-statistic value (3.125) is greater than the Z-critical value (1.64), we
reject the null hypothesis.

p-value= 1 - NORMSDIST(Z-statistic value)= 0.000888 (less than 0.05, hence reject)


Problem 2

Null and alternative hypotheses in this case are given by


H0: µ ³ 30
HA: µ < 30
From the data in Table 6.6, the estimated sample mean is 27.05 days.
The standard deviation of the sampling distribution

s / n = 12.5 / 40 = 1.9764
The value of Z-statistic is given by

X -µ 27.05 - 30
Z= = = -1.4926
s/ n 12.5 / 40

• The critical value of left-tailed test for a = 0.05 is –1.644.


• Since the critical value is less than the Z-statistic value, we fail to reject the null
hypothesis. The p-value for Z = -1.4926 is 0.06777 which is greater than the value of
a.
That is, there is no strong evidence against null hypothesis so we retain the null hypothesis,
which is µ ³ 30.
Problem 3:

a)Hypothesis test: It is given that µ = 82, s = 11.03, n = 100, and


X =84.
The null and alternative hypotheses in this case are:

H : µ = 82
0

H : µ ¹ 82
A

Since the direction of alternative hypothesis is both ways, we have a


two-tailed t-test. The test statistics is given by

X -µ 84 - 82
Z= = = 1.8132
s / n 11.03 / 100
• For a two-tailed test, the critical values at a/2 = 0.025 are -1.96 and 1.96.
• Since the calculated Z-statistic value is less than the critical value, we fail to reject
the null hypothesis (retain the null hypothesis).
• Since the Z-statistic value is 1.8132 and falls on the right tail, we first calculate
normal distribution beyond 1.8132 which is equal to 0.0349.
• Since this is a two-tailed test, the p-value is twice the area to the right side of the Z-
statistic value, which is = 0.0698, that is the p-value in this case is 0.0698

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