CHAPTER 7

Hypothesis Test
 Content of Chapter 7
❖Concepts:
• . Hypothesis test; null and alternative
hypotheses.

❖Type I error and Type II error.

❖Hypothesis test about population mean.

❖Hypothesis test about population proportion.

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 INTRODUCTION -1
❖Every
• . day people make decisions based on their
beliefs about true state of the world.

❖Examples:
➢ A manager believes that an incoming shipment
contains 2% or fewer of defects, and then accept
the shipment.

➢ Grand Auto Corporation produces auto batteries. The

company claims that its top-of-the-line Never Die
batteries are good, on average, for at least 65 months.

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 INTRODUCTION -2
❖In
• . these cases, the information of these beliefs
have started as an informed guess (or a
proposition tentatively advanced as true).

❖When people formulate a belief in this way, we

refer to it as a hypothesis.

❖Determining the validity of an assumption of this

nature is called hypothesis testing.

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 INTRODUCTION -3
❖We
• . use hypothesis testing to resolve conflicts
between two competing hypotheses on a particular
population parameter of interest.

❖We refer to one hypothesis as the null

hypothesis, denoted 𝑯𝟎 , and the other as the
alternative hypothesis, denoted 𝑯𝒂 .

❖In this chapter, our goal is to determine if the null

hypothesis can be rejected in favor of the
alternative hypothesis.
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 INTRODUCTION -4
❖The hypothesis testing procedure enables us to
• . make one of two decisions. The decisions to
“reject” or “ not reject” the null hypothesis.

✓ If sample evidence is consistent with the null

hypothesis, then we reject the null hypothesis.
✓ Conversely, if sample evidence is not inconsistent
with the null hypothesis, then we do not reject the
null hypothesis.

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 Type I and Type II Errors -1
❖The hypothesis testing procedure uses data
from a sample to test the two competing
statements indicated by H0 and Ha.

❖Since the decision of a hypothesis test is based on

limited sample information, we often have two
errors in the decision. That means we reject the
null hypothesis when we should not, or not reject
it when we should.

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 Type I and Type II Errors -2

Decision Null hypothesis is Null hypothesis is

true false

Reject the null Type I error Correct decision

hypothesis
Do not reject the Correct decision Type II error
null hypothesis

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 Type I and Type II Errors -3
❖We consider two types of errors in the context of
hypothesis testing.

Type I error: occurs if we reject the null

hypothesis when it is actually true.

The probability of making a Type I error is called

the level of significance, denoted by 𝜶.

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 Type I and Type II Errors -4
❖ Type II error: occurs if we do not reject the null
hypothesis when it is false.
❖ It is difficult to control for the probability of
making a Type II error.

❖ Statisticians avoid the risk of making a Type II

error by using “do not reject H0” and not “accept
H0”. That is, only two conclusions are possible:

“do not reject H0 “ or “ reject H0 “

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 Type I and Type II Errors -5
❖ Example 1: Suppose that the person takes a
medical test that attempts to detect the disease.
❖ Consider the following hypotheses:
▪ 𝐇𝟎 : the person is free of a particular disease.
▪ Ha: the person has a particular disease.

❖ Types I and II errors occurs when?

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 Type I and Type II Errors -6
❖ Types I error occurs when:
▪ The medical test indicates that the person has
the disease.
▪ But, in reality, the person is free of the disease

❖ Types II error occurs when

▪ The medical test shows that the person is free
of the disease.
▪ But, in reality, the person has the disease.

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 Type I and Type II Errors -7
❖ Example 2: relate to the court of law
❖ Consider the following hypotheses:
▪ 𝐇𝟎 : An accused person is innocent.
▪ Ha: An accused person is guilty.

❖ Types I and II errors occurs when?

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 Type I and Type II Errors -8

❖ Types I error occurs when:

▪ The accused is guilty when she is actually
innocent.

❖ Types II error occurs when

▪ The accused person is innocent when she is
actually guilty.
✓ It is not clear which of the two errors is more
serious to society.
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 Defining the null and alternative
hypotheses -1
• .
❖In general, we follow three steps when
formulating the competing hypotheses.

➢ Step 1: Identify the relevant population

parameter of interest.
➢ Step 2: Determine whether it is one or two-tailed
test.
➢ Step 3: Include some form of the equality sign in
the null hypothesis and use the alternative
hypothesis to establish a claim.

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 Defining the null and alternative
hypotheses -2
❖Note: When setting up hypotheses, 𝐻0 always has
symbol of an equal “=“ in it and 𝐻𝑎 never has
symbol of an equal “=“ in it.
❖General form of hypothesis. Three forms of
hypotheses:
𝑯𝟎 𝑯𝒂
≥ <
≤ >
= ≠
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 Defining the null and alternative
hypotheses -3
• .
❖How to define the null and alternative
hypotheses?

❖𝑯𝟎 : the opposite of Ha.

❖𝑯𝒂 : “Whatever researcher wants to test is placed

in the alternative hypothesis”.

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 Defining the null and alternative
hypotheses -4
❖Example 1: An advertisement for a popular weight-
loss clinic suggests that participants in its new diet
program experience an average weight loss of more
than 10 pounds. A consumer activist wants to
determine if the advertisement’s claim is valid.

❖ Specify the null and the alternative hypotheses to

validate the advertisement’s claim.
❖Sol: we want to determine if the mean weight loss is more than 10
pounds.

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 Defining the null and alternative
hypotheses -5
❖Example 2: A television research analyst wishes to
test a claim that more than 50% of the households
will tune in for a TV episode.
❖Specify the null and the alternative hypotheses to test
the claim.

❖hint: the analyst wants to determine whether p >

0.50, this claim is placed in the alternative
hypothesis.

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 Defining the null and alternative hypotheses -6
❖Example 3:
➢ It is generally believed that at least 60% of the
residents in a small town in Texas are happy
with their lives.
➢ A sociologist wonders whether recent economic woes
have adversely affected the happiness level in this
town.
➢ Specify the null and the alternative hypotheses to
determine if the sociologist’s concern is valid.

➢ Sol: the sociologist wants to establish that the current population

proportion is below 0.60 (p < 0.60) .

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 Hypotheses testing about mean 𝝁 -1
❖ In general, a hypothesis test about the value of a population
mean 𝜇 must take one of the following three forms (where
𝜇0 is the hypothesized value of the population mean).

H 0 :   0 H 0 :   0 H 0 :  = 0
H a :   0 H a :   0 H a :   0

One-tailed One-tailed Two-tailed

(lower-tail) (upper-tail)

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Hypotheses testing about mean 𝝁 -2

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Hypotheses testing about mean 𝝁 -3

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Hypotheses testing about mean 𝝁 -4

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Hypotheses testing about mean 𝝁 -5

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Lower-Tailed Test About a Population
Mean: 𝜎 Known
• Critical Value Approach

Sampling
distribution
of z = x − 0
Reject H 0 / n

 = 
Do Not Reject H 0

z
−z = −1.28 0

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 Upper-Tailed Test About a
Population Mean: 𝝈 Known
• Critical Value Approach

Sampling
distribution
of z = x − 0
/ n Reject H 0

 = 
Do Not Reject H 0

z
0 z = 1.645

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 One-Tailed Test About a Population
Mean: σ is unknown -1
❖Example 1: Grand Auto Corporation produces auto
batteries. The company claims that its top-of-the-line
Never Die batteries are good, on average, for at least 65
months. To test this claim, a consumer protection agency
tested 45 such batteries and found that the mean life is
63.4 months, and the standard deviation is 3 months.

▪ a/ State the null and alternative hypotheses.

▪ b/ What will your conclusion be if the significance level is
2.5%?

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 One-Tailed Test About a Population
Mean: σ is unknown -2
❖Sol:

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 Two-Tailed Test About a Population
Mean: σ is unknown -3
❖Example 2: Sugar is packed in 5-pound bags. An
inspector suspects the bags may not contain 5 pounds. A
sample of 50 bags produces a mean of 4.6 pounds and a
standard deviation of 0.7 pound.

▪ a/ State the null and alternative hypotheses.

▪ b/ Is there enough evidence to conclude that the bags do
not contain 5 pounds as stated at a level of significance of
0.05?
▪ c/Also, find the 95% confidence interval of the true mean.

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 Two-Tailed Test About a Population
Mean: σ is unknown -4
❖Sol:

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 Two -Tailed Test About a Population
Mean: σ is Known -5
Example 3: The average expenditure per student (based
on average daily attendance) for a certain school year was
$10,337 with a population standard deviation of $1560. A
survey for the next school year of 150 randomly selected
students resulted in a sample mean of $10,798.

Do these results indicate that the average expenditure has

changed? Choose level of significance of 5%.

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 Two -Tailed Test About a Population
Mean: σ is Known -6
❖Sol:

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 One -Tailed Test About a Population
Mean: σ is unknown -7
Example 4: A tobacco company claims that its best-
selling cigarettes contain at most 40 mg of nicotine.
Evidence suggests that nicotine is normally distributed.

This claim is tested at the 1% significance level by using the

results of 15 randomly selected cigarettes. The mean is 42.6
mg and the standard deviation is 3.7 mg. What is your
conclusion?

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 One -Tailed Test About a Population
Mean: σ is unknown -7
Example 4: Sol

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 One -Tailed Test About a Population
Mean: σ is unknown -8
❖Example 5: A group of young businesswomen wish to
open a high fashion boutique in a vacant store but only if
the average income of households in the area is at least
$25,000. To test the average income of households in the
area is less than 25000$ or not, a random sample of 9
households is selected and given:

28,000$ 24,000$ 26,000$ 25,000$

23,000$ 27,000$ 26,000$ 22,000$
24,000$

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 Two -Tailed Tests About a Population
Mean: σ is Known -9
❖Q: At a level of significance of 5%, what is your
conclusion?

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 Hypotheses testing about proportion 𝒑 -1

• In general, a hypothesis test about the value of a

population proportion p must take one of the
following three forms (where p0 is the hypothesized
value of the population proportion).

H0: p > p0 H0: p < p0 H0: p = p0

Ha: p < p0 Ha: p > p0 Ha: p ≠ p0

One-tailed One-tailed Two-tailed

(lower tail) (upper tail)

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Hypotheses testing about proportion 𝒑 -2

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Hypotheses testing about proportion 𝒑 -3

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 Examples -1

Example 1:
❖A dietitian claims that 60% of people are trying to avoid
trans fats in their diets. She randomly selected 200 people
and found that 128 people stated that they were trying to
avoid trans fats in their diets.
❖At a level of significance of 5%, is there enough evidence
to reject the dietitian’s claim? State the null and alternative
hypotheses.

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 Examples -1

Example 1: Sol

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 Examples -2
Example 2:
❖A retailer is looking to evaluate its customer service.
Management has determined that if the retailer
wants to stay competitive, then it will have to have at
least a 90% satisfaction rate among its customers.

❖Management will take corrective actions if the

satisfaction rate falls below 90%. A survey of 1,200
customers showed that 1,068 were satisfied with
their customer service.
➢ State the hypotheses to test if the retailer needs to improve its services.

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 Examples -3

Question:
a/ State the hypotheses to test if the retailer needs to
improve its services.
b/ At a level of significance of 5%, what is the manager’s
conclusion?

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End of Chapter 7

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