MGT 205- Introduction to

Statistics
Lecture 8
Inferences Based on a Single Sample: Tests of
Hypotheses

İstanbul Şehir University

Gökçen Arkalı Olcay
Fall 2016-2017

Fall 2016 MGT 205

 Content
1. The Elements of a Test of Hypothesis
2. Formulating Hypotheses and Setting Up the Rejection
Region
3. Test of Hypothesis about a Population Mean: Normal
(z) Statistic
4. Observed Significance Levels: p-Values
5. Test of Hypothesis about a Population Mean:
Student’s t-Statistic
6. Large-Sample Test of Hypothesis about a Population
Proportion
7. Calculating Type II Error Probabilities: More about *
8. Test of Hypothesis about a Population Variance

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 Learning Objectives

1. Test a specific value of a population

parameter (mean or proportion), called a
test of hypothesis
2. Provide a measure of reliability for the
hypothesis test, called the significance level
of the test

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 The Elements of
a Test of Hypothesis

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 Hypothesis Testing
“Suppose building specifications in a certain city require that
the average breaking strength of residential sewer pipe be more
than 2,400 pounds per foot of length.”

We are interested in making an inference about the mean of

a population.
•Are we estimating the value of μ?

We are testing a hypothesis about its value:

“We want to decide whether the mean breaking strength of
the pipe exceeds 2,400 pounds per foot of length”
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 What’s a Hypothesis?

A statistical hypothesis is a statement about the

numerical value of a population parameter.

Hypothesis testing can be used to determine whether

a statement about the value of a population parameter
should or should not be rejected.

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 Null Hypothesis

The null hypothesis, denoted H0, represents the

hypothesis that will be accepted unless the data
provide convincing evidence that it is false.

This usually represents the “status quo” which we

adopt until it is proven false.

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 Alternative Hypothesis

The alternative (research) hypothesis, denoted Ha,

represents the hypothesis that will be accepted only if
the data provide convincing evidence of its truth.

The alternative hypothesis is what the test is attempting

to establish.

It is the opposite of what is stated in the null hypothesis

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 Developing Null and Alternative
Hypotheses
“Suppose building specifications in a certain city
require that the average breaking strength of
residential sewer pipe be more than 2,400 pounds per
foot of length.”

Null hypothesis (H0): µ ≤ 2,400

(i.e., the manufacturer’s pipe does not meet specifications)
Alternative (research) hypothesis (Ha): µ > 2,400
(i.e., the manufacturer’s pipe meets specifications)

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 Testing Research Hypotheses
 The research hypothesis should be expressed
as the alternative hypothesis.

 The conclusion that the research hypothesis

is true comes from sample data that
contradict the null hypothesis.

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 Test Statistic
How to decide?
•It is reasonable to use sample mean to make the
inference just as we did when formulating confidence
intervals for μ.

The test statistic is a sample statistic, computed

from information provided in the sample, that
the researcher uses to decide between the null
and alternative hypotheses.

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 Test Statistic
Convincing evidence in favor of the alternative
hypothesis will exist when the value of x exceeds 2,400
by an amount that cannot be readily attributed to
sampling variability. To decide, we compute a test
statistic:
x - 2, 400
z=
sx
How large must z be before the city can be convinced that the
null hypothesis can be rejected in favor of the alternative and
conclude that the pipe meets specifications?

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 Rejection Region
The rejection region of a statistical test is the
set of possible values of the test statistic for
which the researcher will reject H0 in favor of
Ha.

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 Rejection Region
Null hypothesis (H0): µ ≤ 2,400
(i.e., the manufacturer’s pipe does not meet specifications)
Alternative (research) hypothesis (Ha): µ > 2,400
(i.e., the manufacturer’s pipe meets specifications)
Rejection region: z >1.645 which corresponds to α=0.05.

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 Rejection Region- Example
Suppose we test 50 sections of sewer pipes:
x = 2, 460
s= 200
Then,
x - 2, 400 2, 460 - 2, 400
z= » = 60 / 28.28 = 2.12
sx 200 / 50
Since z=2.12>1.645, we reject the null hypothesis that
μ=2,400 and conclude that μ>2,400.

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 Rejection Region- Example

How much faith can be placed in this conclusion?

What is the probability that our statistical test could
lead us to reject the null hypothesis when in fact the
null hypothesis is true?

α=0.05
Type I error..
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 Type I Error

A Type I error occurs if the researcher rejects

the null hypothesis in favor of the alternative
hypothesis when, in fact, H0 is true.

The probability of committing a Type I error is

denoted by .

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 Rejection Region- Example cont’d

Suppose we test 50 sections of sewer pipes:

x = 2, 430
s= 200
Then,
x - 2, 400 2, 430 - 2, 400
z= » =1.06
sx 200 / 50
Since it does not fall into the rejection region, we cannot
reject the null hypothesis using α=0.05.

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 Rejection Region- Example cont’d

Should we accept the null hypothesis and

conclude that the manufacturing pipe does not
meet specifications? To do so would be to risk a
Type II error– that of concluding that the null
hypothesis is true when in fact it is false.

Type II error..

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 Type II Error

A Type II error occurs if the researcher accepts

the null hypothesis when, in fact, H0 is false.
The probability of committing a Type II error is
denoted by .

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 Conclusions and Consequences for
a Test of Hypothesis
Below four possible outcomes of a test of hypothesis:

True State of Nature

Conclusion H0 True Ha True
Accept H0 Correct decision Type II error
(Assume H0 True) (probability )
Reject H0 Type I error Correct decision
(Assume Ha True) (probability )

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Elements of a Test of Hypothesis

1. Null hypothesis (H0): A theory about the specific

values of one or more population parameters. The
theory generally represents the status quo, which
we adopt until it is proven false.
2. Alternative (research) hypothesis (Ha): A theory
that contradicts the null hypothesis. The theory
generally represents that which we will adopt only
when sufficient evidence exists to establish its
truth.

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Elements of a Test of Hypothesis

3. Test statistic: A sample statistic used to decide

whether to reject the null hypothesis.
4. Rejection region: The numerical values of the test
statistic for which the null hypothesis will be
rejected. The rejection region is chosen so that the
probability is  that it will contain the test statistic
when the null hypothesis is true, thereby leading to
a Type I error. The value of  is usually chosen to
be small (e.g., .01, .05, or .10) and is referred to as
the level of significance of the test.
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Elements of a Test of Hypothesis

5. Assumptions: Clear statement(s) of any

assumptions made about the population(s) being
sampled.
6. Experiment and calculation of test statistic:
Performance of the sampling experiment and
determination of the numerical value of the test
statistic.

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Elements of a Test of Hypothesis

7. Conclusion:

a. If the numerical value of the test statistic falls in

the rejection region, we reject the null hypothesis
and conclude that the alternative hypothesis is
true. We know that the hypothesis-testing process
will lead to this conclusion incorrectly (Type I
error) only 100% of the time when H0 is true.

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Elements of a Test of Hypothesis

7. Conclusion:

b. If the test statistic does not fall in the rejection region,

we do not reject H0. Thus, we reserve judgment about
which hypothesis is true. We do not conclude that the
null hypothesis is true because we do not (in general)
know the probability  that our test procedure will
lead to an incorrect acceptance of H0 (Type II error).
Instead we state that the sample evidence is
insufficient to reject H0 when the test statistic is not in
the rejection region.

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 Determining the Target
Parameter
We will develop methods for testing a population mean,
a population proportion and a population variance.
Parameter Key Words or Phrases Type of Data
µ Mean; average Quantitative
p Proportion; percentage; Qualitative
fraction; rate
2 Variance; variability; Quantitative
spread

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 Formulating Hypotheses and Setting Up
the Rejection Region

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 Steps for Selecting the Null and
Alternative Hypotheses
1. Select the alternative hypothesis as that which the
sampling experiment is intended to establish. The
alternative hypothesis will assume one of three
forms:
a. One-tailed, upper-tailed (e.g., Ha: µ > 2,400)
b. One-tailed, lower-tailed (e.g., Ha: µ < 2,400)
c. Two-tailed (e.g., Ha: µ ≠ 2,400)

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 Steps for Selecting the Null and
Alternative Hypotheses
2. Select the null hypothesis as the status quo, that
which will be presumed true unless the sampling
experiment conclusively establishes the alternative
hypothesis. The null hypothesis will be specified as
that parameter value closest to the alternative in
one-tailed tests and as the complementary (or only
unspecified) value in two-tailed tests.
(e.g., H0: µ = 2,400)

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 One-Tailed Test

A one-tailed test of hypothesis is one in which

the alternative hypothesis is directional and
includes the symbol “ < ” or “ >.”

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 Two-Tailed Test

A two-tailed test of hypothesis is one in which

the alternative hypothesis does not specify
departure from H0 in a particular direction and is
written with the symbol “ ≠.”

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 Example 1- Formulating H0 and Ha
for a Test of Population Mean

A metal lathe is checked periodically by quality

inspectors to determine whether it is producing
machine bearings with a mean diameter of 0.5 inch. If
the mean diameter of the bearings is larger or smaller
than 0.5 inch, then the process is out of control and
must be adjusted. Formulate the null and alternative
hypotheses for a test to determine whether the bearing
production process is out of control.

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 Example 1- Formulating H0 and Ha
for a Test of Population Mean

Null hypothesis (H0): µ = 0.5

(the process is in control)
Alternative (research) hypothesis (Ha): µ ≠ 0.5
(the process is out of control)

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 Example 2- Formulating H0 and Ha
for a Test of Population Proportion
Cigarette advertisements are required by federal law to carry the
following statement: “Warning: The surgeon general has
determined that cigarette smoking is dangerous to your health.”
However, this warning is often located in inconspicuous corners
of the advertisements and printed in small type. Suppose the
Federal Trade Commission (FTC) claims that 80% of cigarette
consumers fail to see the warning. A marketer for a large
tobacco firm wants to gather evidence to show that the FTC’s
claim is too high, i.e., that fewer than 80% of cigarette
consumers fail to see the warning. Specify the null and
alternative hypotheses for a test of the FTC’s claim.

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 Rejection Region
(One-tailed Test: lower-tailed)

Rejection
0.5-
Region

0
Form of Ha: <
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 Rejection Region
(One-tailed Test: upper-tailed)

0.5-
Rejection
Region


0
Form of Ha: >
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 Rejection Regions
(Two-tailed Test)
0.5-α/2 0.5-α/2

Rejection Rejection
Region Region

1/2  1/2 

z
0
Form of Ha: ≠
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 Rejection Regions

Alternative Hypotheses

Lower- Upper- Two-Tailed

Tailed Tailed
 = .10 z < –1.28 z > 1.28 z < –1.645 or z > 1.645

 = .05 z < –1.645 z > 1.645 z < –1.96 or z > 1.96

 = .01 z < –2.33 z > 2.33 z < –2.575 or z > 2.575

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 Example 3- Setting up a Hypothesis
Test for μ

A manufacturer of cereal wants to test the performance

of one of its filling machines. The machine is designed
to discharge a mean amount of 12 ounces per box, and
the manufacturer wants to detect any departure from
this setting. This quality study calls for randomly
sampling 100 boxes from today’s production run and
determining whether the mean fill for the run is 12
ounces per box. Set up a test of hypothesis for this
study using α=0.01.

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 Test of Hypotheses about a Population
Mean:
Normal (z) Statistic

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 Large-Sample Test of Hypothesis
about µ

One-Tailed Test Two-Tailed Test

H0: µ = µ0 H0: µ = µ0
Ha: µ < µ0 Ha: µ ≠ µ0
(or Ha: µ > µ0)

Test Statistic: Test Statistic:

x - µ0 x - µ0 x - µ0 x - µ0
z= » z= »
sx s n sx s n
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 Large-Sample Test of Hypothesis
about µ

One-Tailed Test
Rejection region:
z < –z
(or z > z when Ha: µ > µ0)
where z is chosen so that
P(z > z) = 

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 Large-Sample Test of Hypothesis
about µ

Two-Tailed Test
Rejection region:
|z| > z
where z is chosen so that
P(|z| > z) = /2

Note: µ0 is the symbol for the numerical value assigned

to µ under the null hypothesis.
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 Conditions Required for a Valid
Large-Sample Hypothesis Test for µ

1. A random sample is selected from the target

population.
2. The sample size n is large (i.e., n ≥ 30). (Due to the
Central Limit Theorem, this condition guarantees
that the test statistic will be approximately normal
regardless of the shape of the underlying probability
distribution of the population.)

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 Possible Conclusions for a Test of
Hypothesis

1. If the calculated test statistic falls in the

rejection region, reject H0 and conclude that
the alternative hypothesis Ha is true. State
that you are rejecting H0 at the  level of
significance.

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 Possible Conclusions for a Test of
Hypothesis

2. If the test statistic does not fall in the

rejection region, conclude that the sampling
experiment does not provide sufficient
evidence to reject H0 at the  level of
significance. [Generally, we will not “accept”
the null hypothesis unless the probability  of
a Type II error has been calculated.]

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 Example 4- Carrying Out a Hypothesis
Test for μ

Refer to the quality control test set up in Example 3. Recall that a

machine is designed to discharge a mean of 12 ounces of cereal
per box. A sample of 100 boxes yielded the fill amounts (in
ounces) such that

x =11.851 and s= 0.512

Use the data to conduct the test.

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 Example 5- One-Tailed z Test

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 Observed Significance Levels:
p-Values

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 p-Value
• Called observed level of significance
• Smallest value of  for which H0 can be
rejected
• Used to make rejection decision
• If p-value  , do not reject H0
• If p-value < , reject H0

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 Steps for Calculating the p-Value for a Test of
Hypothesis
1. Determine the value of the test statistic z corresponding to
the result of the sampling experiment.
2. (a) If the test is one-tailed, the p-value is equal to the tail
area beyond z in the same direction as the alternative
hypothesis. Thus, if the alternative hypothesis is of the form
> , the p-value is the area to the right of, or above, the
observed z-value. Conversely, if the alternative is of the form
< , the p-value is the area to the left of, or below, the
observed z-value.

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 Steps for Calculating the p-Value for
a Test of Hypothesis
2. (b) If the test is two-tailed, the p-value is equal to
twice the tail area beyond the observed z-value in
the direction of the sign of z – that is, if z is positive,
the p-value is twice the area to the right of, or
above, the observed z-value. Conversely, if z is
negative, the p-value is twice the area to the left of,
or below, the observed z-value.

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 Reporting Test Results as
p-Values: How to Decide Whether to
Reject H0

1. Choose the maximum value of  that you are

willing to tolerate.
2. If the observed significance level (p-value) of
the test is less than the chosen value of ,
reject the null hypothesis. Otherwise, do not
reject the null hypothesis.

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 Example 6- Comparing Rejection
Regions to p-values
Consider the one-tailed test of hypothesis, H0: μ=100 versus Ha:
μ>100.
a)Suppose the test statistic is z=1.44. Find the p-value of the test
and the rejection region for the test when α=0.05. Then show
that the conclusion using the rejection region approach will be
identical to the conclusion based on the p-value.
b)Now suppose the test statistic is z=3.01. Find the p-value of the
test and the rejection region for the test when α=0.05. Again
show that the conclusion using the rejection region approach
will be identical to the conclusion based on the p-value.

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 Example 7- Computing p-value

The manufacturer of the X-15 steel-belted radial truck tire claims

that the mean mileage the tire can be driven before the tread
wears out is 60,000 miles. Assume the mileage wear follows the
normal distribution and the standard deviation of the distribution
is 5,000 miles. Crosset Truck Company bought 48 tires and found
that the mean mileage for its trucks is 59,500 miles. Is Crosset’s
experience different from that claimed by the manufacturer at
the 0.05 significance level?

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 Key Ideas
Key Words for Identifying the Target Parameter

 – Mean, Average
p – Proportion, Fraction, Percentage, Rate, Probability
2 – Variance, Variability, Spread

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 Key Ideas
Elements of a Hypothesis Test
1. Null hypothesis (H0)
2. Alternative hypothesis (Ha)
3. Test statistic (z, t, or 2)
4. Significance level ()
5. p-value
6. Conclusion

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 Key Ideas
Errors in Hypothesis Testing

Type I Error = Reject H0 when H0 is true

(occurs with probability )
Type II Error = Accept H0 when H0 is false
(occurs with probability )

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 Key Ideas
Forms of Alternative Hypothesis

Lower-tailed : Ha :  < 50

Upper-tailed : Ha :  > 50

Two-tailed : Ha :  ≠ 50

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 Key Ideas
Using p-values to Decide

1. Choose significance level ()

2. Obtain p-value of the test
3. If  > p-value, reject H0

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