GIU_3005_64_21192_2024-12-02T01_06_08 (2)

Department of Mathematics
Dr. Hossam M. Hassan
Statistics
for Business Informatics
Worksheet No. (10)- Solution
Problem 1:
a) If you use a 0.05 level of significance in a two-tail hypothesis test, what decision will you make
if 𝑍𝑆𝑇𝐴𝑇 = −0.76?
b) If you use a 0.05 level of significance in a two-tail hypothesis test, what decision will you make
if 𝑍𝑆𝑇𝐴𝑇 = +2.21?
c) If you use a 0.10 level of significance in a two-tail hypothesis test, what is your decision rule for
rejecting a null hypothesis that the population mean equals 500 if you use the Z test?
d) If you use a 0.01 level of significance in a two-tail hypothesis test, what is your decision rule for
rejecting 𝐻0 ∶ 𝜇 = 12.5 if you use the Z test? What is your decision?
e) What is the p-value if, in a two-tail hypothesis test, 𝑍𝑆𝑇𝐴𝑇 = +2.00?
Solution
a) Decision rule: Reject 𝐻0 if 𝑍𝑆𝑇𝐴𝑇 < – 1.96 𝑜𝑟 𝑍𝑆𝑇𝐴𝑇 > +1.96.

Decision: Since 𝑍𝑆𝑇𝐴𝑇 = − 0.76 is in between the two critical values, do not reject 𝐻0 .
b) Decision rule: Reject 𝐻0 if 𝑍𝑆𝑇𝐴𝑇 < – 1.96 𝑜𝑟 𝑍𝑆𝑇𝐴𝑇 > +1.96.
Decision: Since 𝑍𝑆𝑇𝐴𝑇 = +2.21 is greater than the upper critical value of + 1.96, reject 𝐻0 .
c) Decision rule: Reject 𝐻0 if 𝑍𝑆𝑇𝐴𝑇 < – 1.645 𝑜𝑟 𝑍𝑆𝑇𝐴𝑇 > +1.645.
d) Decision rule: Reject 𝐻0 if 𝑍𝑆𝑇𝐴𝑇 < –2.58 or 𝑍𝑆𝑇𝐴𝑇 > +2.58.
Decision: Since 𝑍𝑆𝑇𝐴𝑇 = – 2.61 is less than the lower critical value of –2.58, reject 𝐻0 .
e) 𝑝 − 𝑣𝑎𝑙𝑢𝑒 = 2𝑃(𝑍 < −2.61) = 2(1 − 0.9772) = 0.0456
Problem 2:
Many consumer groups feel that the U.S. Food and Drug Administration (FDA) drug approval process
is too easy and, as a result, too many drugs are approved that are later found to be unsafe. On the other
hand, a number of industry lobbyists have pushed for a more lenient approval process so that
pharmaceutical companies can get new drugs approved more easily and quickly. Consider a null
hypothesis that a new, unapproved drug is unsafe and an alternative hypothesis that a new, unapproved
drug is safe.
a. Explain the risks of committing a Type I or Type II error.

b. Which type of error are the consumer groups trying to avoid? Explain.
c. Which type of error are the industry lobbyists trying to avoid? Explain.
d. How would it be possible to lower the chances of both Type I and Type II errors?
Solution
Page 1 of 5
a) A Type I error is the mistake of approving an unsafe drug. A Type II error is not approving a
safe drug.
b) The consumer groups are trying to avoid a Type I error.
c) The industry lobbyists are trying to avoid a Type II error.
d) To lower both Type I and Type II errors, the FDA can require more information and evidence in
the form of more rigorous testing. This can easily translate into longer time to approve a new
drug.
Problem 3:
A bottled water distributor wants to determine whether the mean amount of water contained in 1-gallon
bottles purchased from a nationally known water bottling company is actually 1 gallon. You know
from the water bottling company specifications that the standard deviation of the amount of water per
bottle is 0.02 gallon. You select a random sample of 50 bottles, and the mean amount of water per 1-
gallon bottle is 0.995 gallon.
a. Is there evidence that the mean amount is different from 1.0 gallon? (Use a = 0.01.)
b. Compute the p-value and interpret its meaning.
c. Construct a 99% confidence interval estimate of the population mean amount of water per bottle.
d. Compare the results of (a) and (c). What conclusions do you reach?
Solution
𝐻0 : 𝜇 = 1. The mean amount of water is 1 gallon.
𝐻1 : 𝜇 ≠ 1. The mean amount of water differs from 1 gallon.
Decision rule: Reject 𝐻0 if |𝑍𝑆𝑇𝐴𝑇 | > 2.5758
Test statistic:
𝑋̅ − 𝜇 0.995 − 1
𝑍𝑆𝑇𝐴𝑇 = = = −1.7678
𝜎/√𝑛 0.2/√50
Decision: Since |𝑍𝑆𝑇𝐴𝑇 | < 2.5758, do not reject 𝐻0 . There is not enough evidence to conclude that
the mean amount of water contained in 1-gallon bottles purchased from a nationally known water
bottling company is different from 1 gallon.
Problem 4:
If, in a sample of 𝑛 = 160 selected from a left-skewed population, 𝑋̅ = 65, and 𝑆 = 21, would you
use the 𝑡 test to test the null hypothesis 𝐻0 : 𝜇 = 60? Discuss.
Page 2 of 5
Solution
Yes, you may use the t test to test the null hypothesis that 𝜇 = 60 even though the population is left-
skewed because the sample size is sufficiently large (𝑛 = 160). The 𝑡 test assumes that, if the
underlying population is not normally distributed, the sample size is sufficiently large to enable the test
statistic 𝑡 to be influenced by the Central Limit Theorem.
Problem 5:
The Berg Balance Scale (BBS), named after its developer Katherine Berg, is a popular clinical test of a
person's static and dynamic balance abilities. It is scored on a scale of 0 to 56; the higher the value, the
better the score. The cut-off score is 45, which means that a score less than 45 indicates a greater risk
of falling. The file BBS_Older contains data for 20 older patients at a hospital:
43 40 32 38 32 34 46 33 39 34
48 42 9 49 40 40 35 40 40 39
a. At the 0.05 level of significance, is there evidence that the population mean BBS value is less than
40?
b. What assumption about the population distribution is needed in order to conduct the t test in (a)?
c. Construct a boxplot or a normal probability plot to evaluate the assumption made in (b).
d. Do you think that the assumption needed in order to conduct the t test in (a) is valid? Explain.
e. A physiotherapist meets with one of the researchers who gathered this data and asks what BBS
values she can expect in case of her older patients. The researcher replies “Almost certainly less
than 40.” Based on the results of (a) through (c), evaluate the accuracy of this statement.
Solution
Page 3 of 5
(d) The data seems to be skewed towards the left. (with one extreme point).
(e) Based on the results of (a), the researcher does not have enough evidence to make that statement
Problem 6:
If, in a random sample of 400 items, 88 are defective
a) what is the sample proportion of defective items?

b) If the null hypothesis is that 20% of the items in the population are defective, what is the value
of 𝑍𝑆𝑇𝐴𝑇 ?
c) Suppose you are testing the null hypothesis 𝐻0 : 𝜋 = 0.20 against the two-tail alternative
hypothesis 𝐻1 : 𝜋 ≠ 0.20 and you choose the level of significance 𝛼 = 0.05. What is your
statistical decision?
Solution
𝑋 88
a. 𝑝 = = = 0.22
𝑛 400
𝑝−𝜋 0.22−0.20
b. 𝑍𝑆𝑇𝐴𝑇 = = =1
𝜋(1−𝜋) 0.2(0.8)
√ √
𝑛 400
c.
Problem 6:
Page 4 of 5
According to a recent National Association of Colleges and Employers (NACE) report, 44% of college
students who had unpaid internships received full-time job offers post-graduation compared to 72% of
college students who had paid internships. A recent survey of 60 college unpaid interns at a local
university found that 30 received full-time job offers post-graduation.
a. Use the five-step p-value approach to hypothesis testing and a 0.05 level of significance to determine
whether the proportion of college unpaid interns that received full-time job offers post-graduation is
different from 0.44.
b. Assume that the study found that 35 of the 60 college unpaid interns had received full-time job
offers post-graduation and repeat (a). Are the conclusions the same?
Solution
a)
b)
Page 5 of 5

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Department of Mathematics

Dr. Hossam M. Hassan

a) Decision rule: Reject 𝐻0 if 𝑍𝑆𝑇𝐴𝑇 < – 1.96 𝑜𝑟 𝑍𝑆𝑇𝐴𝑇 > +1.96.

a. Explain the risks of committing a Type I or Type II error.

𝐻0 : 𝜇 = 1. The mean amount of water is 1 gallon.

𝐻1 : 𝜇 ≠ 1. The mean amount of water differs from 1 gallon.

Decision rule: Reject 𝐻0 if |𝑍𝑆𝑇𝐴𝑇 | > 2.5758

If, in a random sample of 400 items, 88 are defective

a) what is the sample proportion of defective items?

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