CHAPTER 9

HYPOTHESIS TESTS
ABOUT THE MEAN AND
PROPORTION

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Opening Example
Will you graduate from college with debt? If yes, how much money do you think
you will owe? Do you know that students who graduated from public and
nonprofit colleges in 2013 with loans had an average debt of $28,400? The
average debt of the class of 2013 varied a great deal from state to state, with
the highest average debt for students who graduated from colleges in New
Hampshire at $32,795 and the lowest average for students who graduated from
colleges in New Mexico at $18,656. (See Case Study 9–1.)

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9.1 Hypothesis Tests: An Introduction
Two Hypotheses
Rejection and Nonrejection Regions
Two Types of Errors
Tails of a Test

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Two Hypotheses
Definition
A null hypothesis is a claim (or statement) about a
population parameter that is assumed to be true until it is
declared false.

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Two Hypotheses
Definition
An alternative hypothesis is a claim about a population
parameter that will be declared true if the null hypothesis is
declared to be false.

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Rejection and Nonrejection Regions
Figure 9.1 Nonrejection and Rejection Regions for the Court Case

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Two Types of Errors
Table 9.1 Four Possible Outcomes for a Court Case

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Two Types of Errors
Definition
A Type I error occurs when a true null hypothesis is
rejected. The value of α represents the probability of
committing this type of error; that is,
α = P(H0 is rejected | H0 is true)
The value of α represents the significance level of the test.

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Two Types of Errors
Definition
A Type II error occurs when a false null hypotheses is not
rejected. The value of β represents the probability of
committing a Type II error; that is,
β = P (H0 is not rejected | H0 is false)
The value of 1 – β is called the power of the test. It
represents the probability of not making a Type II error.

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Table 9.2 Four Possible Outcomes for a Test of Hypothesis

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Tails of a Test
Definition
A two-tailed test has rejection regions in both tails, a
left-tailed test has the rejection region in the left tail, and
a right-tailed test has the rejection region in the right tail
of the distribution curve.

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A Two-Tailed Test
According to the U.S. Bureau of Labor Statistics, workers in
the United States who were employed earned an average of
$47,230 a year in 2014. Suppose an economist wants to
check whether this mean has changed since 2014.
Suppose an economist wants to check whether this mean
has changed since 2014. The key word here is changed.

The mean annual earning of employed Americans has

changed since 2014. This is an example of a two tailed test.

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A Two-Tailed Test
Let μ be the mean annual earning of employed Americans.
The two possible decisions are
■ H : μ = $47,230 (The mean annual earning of
0
employed Americans has not changed since 2014)
■ H1 : μ ≠ $47,230 (The mean annual earning of
employed Americans has changed since 2014)

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A Two-Tailed Test
❑ Whether a test is two–tailed or one–tailed is determined
by the sign in the alternative hypothesis.
❑ If the alternative hypothesis has a not equal to (≠) sign,
it is a two–tailed test.

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Figure 9.2 A Two-Tailed Test

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A Left-Tailed Test
Reconsider the example of the mean amount of soda in all
soft-drink cans produced by a company. The company claims
that these cans, on average, contain 12 ounces of soda.
However, if these cans contain less than the claimed amount
of soda, then the company can be accused of cheating.
Suppose a consumer agency wants to test whether the mean
amount of soda per can is less than 12 ounces. Note that the
key phrase this time is less than, which indicates a left-tailed
test.

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A Left-Tailed Test
Let μ be the mean amount of soda in all cans. The two
possible decisions are
■ H : μ = 12 ounces (The mean is equal to 12 ounces)
0
■ H : μ < 12 ounces (The mean is less than 12 ounces)
1

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A Left-Tailed Test
In this case, we can also write the null hypothesis as H0 : μ ≥
12. This will not affect the result of the test as long as the
sign in H1 is less than (<).
When the alternative hypothesis has a less than (<) sign, the
test is always left–tailed.

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Figure 9.3 A Left-Tailed Test

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A Right-Tailed Test
According to www.city-data.com, the average price of
homes in West Orange, New Jersey, was $471,257 in 2013.
Suppose a real estate researcher wants to check whether
the current mean price of homes in this town is higher than
$471,257. The key phrase in this case is higher than, which
indicates a right-tailed test.

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A Right-Tailed Test
Let μ be the current mean price of homes in this town. The
two possible decisions are
■ H : μ = $471,257 (The current mean price of homes in
0
this town is not higher than $ 471,257)
■ H1 : μ > $471,257 (The current mean price of homes in
this town is higher than $ 471,257)

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A Right-Tailed Test
When the alternative hypothesis has a greater than (>) sign,
the test is always right–tailed.

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Figure 9.4 A Right-Tailed Test

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Table 9.3 Signs in H0 and H1 and Tails of a Test

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Two Procedures
Two procedures to make tests of hypothesis

1. The p-value approach

2. The critical-value approach

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9.2 Hypothesis Tests About µ : σ Known
Three Possible Cases

Case I. If the following three conditions are fulfilled:

1. The population standard deviation σ is known

2. The sample size is small (i.e., n < 30)
3. The population from which the sample is selected is
normally distributed.

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Hypothesis Tests About µ : σ Known
Three Possible Cases

Case II. If the following two conditions are fulfilled:

1. The population standard deviation σ is known

2. The sample size is large (i.e., n ≥ 30)

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Hypothesis Tests About µ : σ Known
Three Possible Cases

Case III. If the following three conditions are fulfilled:

1. The population standard deviation σ is known

2. The sample size is small (i.e., n < 30)
3. The population from which the sample is selected is
not normally distributed (or its distribution is
unknown).

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Hypothesis Tests About µ : σ Known
Three Possible Cases

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Hypothesis Tests About µ : σ Known
Definition
Assuming that the null hypothesis is true, the p-value can be
defined as the probability that a sample statistic (such as the
sample mean) is at least as far away from the hypothesized
value in the direction of the alternative hypothesis as the one
obtained from the sample data under consideration. Note that
the p–value is the smallest significance level at which the null
hypothesis is rejected.

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Figure 9.5 The p–Value for a Right-Tailed Test

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Figure 9.6 The p–Value for a Two-Tailed Test

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 Calculating the z Value for
● When using the normal distribution, the value of z for for
a test of hypothesis about μ is computed as follows:

● The value of z calculated for using this formula is also called

the observed value of z.

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Steps to Perform a Test of Hypothesis Using the p–Value
Approach
1. State the null and alternative hypothesis.
2. Select the distribution to use.
3. Calculate the p–value.
4. Make a decision.

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Example 9-1
At Canon Food Corporation, it used to take an average of 90
minutes for new workers to learn a food processing job.
Recently the company installed a new food processing
machine. The supervisor at the company wants to find if the
mean time taken by new workers to learn the food
processing procedure on this new machine is different from
90 minutes. A sample of 20 workers showed that it took, on
average, 85 minutes for them to learn the food processing
procedure on the new machine. It is known that the learning
times for all new workers are normally distributed with a
population standard deviation of 7 minutes. Find the
p–value for the test that the mean learning time for the food
processing procedure on the new machine is different from
90 minutes. What will your conclusion be if α = .01?

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Example 9-1: Solution
Step 1: H0: μ = 90 H1: μ ≠ 90
Step 2: The population standard deviation σ is known, the
sample size is small (n < 30), but the population distribution
is normal. We will use the normal distribution to find the
p–value and make the test.

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Example 9-1: Solution
Step 3:

p-value = 2(.0007) = .0014

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Figure 9-7 The p-Value for a Two-Tailed Test

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Example 9-1: Solution
Step 4: Because α = .01 is greater than the p-value of
.0014, we reject the null hypothesis at this significance level.

Therefore, we conclude that the mean time for learning the

food processing procedure on the new machine is different
from 90 minutes.

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Example 9-2
The management of Priority Health Club claims that its
members lose an average of 10 pounds or more within the
first month after joining the club. A consumer agency that
wanted to check this claim took a random sample of 36
members of this health club and found that they lost an
average of 9.2 pounds within the first month of membership
with a standard deviation of 2.4 pounds. Find the p–value for
this test. What will your decision be if α = .01? What if α =
.05?

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Example 9-2: Solution
Step 1: H0: μ ≥ 10 H1: μ < 10
Step 2: The population standard deviation σ is known, the
sample size is large (n > 30). Due to the Central Limit
Theorem, we will use the normal distribution to find the
p–value and perform the test.

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Example 9-2: Solution
Step 3:

p-value = .0228

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Figure 9-8 The p-Value for a Left-Tailed Test

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Example 9-2: Solution
Step 4: Since α = .01 is less than the p-value of .0228, we
do not reject the null hypothesis at this significance level.
Consequently, we conclude that the mean weight lost within
the first month of membership by the members of this club is
10 pounds or more.

Because α = .05 is greater than the p-value of .0228, we

reject the null hypothesis at this significance level.
Therefore, we conclude that the mean weight lost within the
first month of membership by the members of this club is
less than 10 pounds.

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Hypothesis Tests About µ : σ Known
Test Statistic
In tests of hypotheses about μ using the normal distribution,
the random variable

is called the test statistic. The test statistic can be defined

as a rule or criterion that is used to make the decision
whether or not to reject the null hypothesis.

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Hypothesis Tests About µ : σ Known
Steps to Perform a Test of Hypothesis with the Critical-
Value Approach

1. State the null and alternative hypotheses.

2. Select the distribution to use.
3. Determine the rejection and nonrejection regions.
4. Calculate the value of the test statistic.
5. Make a decision.

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Example 9-3
The TIV Telephone Company provides long-distance
telephone service in an area. According to the company’s
records, the average length of all long-distance calls placed
through this company in 2015 was 12.44 minutes. The
company’s management wanted to check if the mean length
of the current long-distance calls is different from 12.44
minutes. A sample of 150 such calls placed through this
company produced a mean length of 13.71 minutes with a
standard deviation of 2.65 minutes. Using the 2%
significance level, can you conclude that the mean length of
all current long-distance calls is different from 12.44
minutes?

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Example 9-3: Solution
Step 1: H0 : μ = 12.44 H1 : μ ≠ 12.44
Step 2: The population standard deviation σ is known, and
the sample size is large (n > 30). Due to the Central Limit
Theorem, we will use the normal distribution to perform the
test.

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Example 9-3: Solution
Step 3: α = .02
The ≠ sign in the alternative hypothesis indicates that the
test is two-tailed.
Area in each tail = α / 2= .02 / 2 = .01.
The z values for the two critical points are -2.33 and 2.33.

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Figure 9.9

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 Calculating the Value of the Test Statistic
● When using the normal distribution, the value of the test
statistic z for for a test of hypothesis about μ is computed
as follows:

● The value of z for is also called the observed value of z.

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Example 9-3: Solution
Step 4:

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Example 9-3: Solution
Step 5: This value of z = 5.87 is greater than the critical
value of z = 2.33, and it falls in the rejection region in the
right tail in Figure 9.9. Hence, we reject H0 and conclude that
based on the sample information, it appears that the mean
length of all such calls is not equal to 12.44 minutes.

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Example 9-4
The mayor of a large city claims that the average net worth
of families living in this city is at least $300,000. A random
sample of 25 families selected from this city produced a
mean net worth of $288,000. Assume that the net worths of
all families in this city have a normal distribution with the
population standard deviation of $80,000. Using the 2.5%
significance level, can you conclude that the mayor’s claim
is false?

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Example 9-4: Solution
Step 1: H0 : μ ≥ $300,000 H1 : μ < $300,000
Step 2: The population standard deviation σ is known, the
sample size is small (n < 30), but the population distribution is
normal. Consequently, we will use the normal distribution to
perform the test.

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Example 9-4: Solution
Step 3: α = .025
The < sign in the alternative hypothesis indicates that the
test is left-tailed.
Area in the left tail = α = .025.
The critical value of z is -1.96.

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Figure 9.10

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Example 9-4: Solution
Step 4:

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Example 9-4: Solution
Step 5: This value of z = -.75 is greater than the critical
value of z = -1.96, and it falls in the nonrejection region. As
a result, we fail to reject H0. Therefore, we can state that
based on the sample information, it appears that the mean
net worth of families in this city is not less than $300,000.

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Case Study 9-1 Average Student Debt for the Class of 2013

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9.3 Hypothesis Tests About µ : σ Not Known
Three Possible Cases

Case I. If the following three conditions are fulfilled:

1. The population standard deviation σ is not known

2. The sample size is small (i.e., n < 30)
3. The population from which the sample is selected is
normally distributed.

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Hypothesis Tests About µ : σ Not Known
Three Possible Cases

Case II. If the following two conditions are fulfilled:

1. The population standard deviation σ is not known

2. The sample size is large (i.e., n ≥ 30)

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Hypothesis Tests About µ : σ Not Known
Three Possible Cases

Case III. If the following three conditions are fulfilled:

1. The population standard deviation σ is not known

2. The sample size is small (i.e., n < 30)
3. The population from which the sample is selected is not
normally distributed (or the shape of its distribution is
unknown).

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Hypothesis Tests About µ : σ Not Known
Three Possible Cases

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Hypothesis Tests About µ : σ Not Known
Test Statistic
The value of the test statistic t for the sample mean is
computed as

The value of t calculated for by using this formula is also

called the observed value of t.

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Example 9-5
A psychologist claims that the mean age at which children
start walking is 12.5 months. Carol wanted to check if this
claim is true. She took a random sample of 18 children and
found that the mean age at which these children started
walking was 12.9 months with a standard deviation of .80
month. It is known that the ages at which all children start
walking are approximately normally distributed. Find the
p-value for the test that the mean age at which all children
start walking is different from 12.5 months. What will your
conclusion be if the significance level is 1%?

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Example 9-5: Solution
Step 1: H0 : μ = 12.5 H1 : μ ≠ 12.5
Step 2: The population standard deviation σ is not known,
the sample size is small (n < 30), and the population is
normally distributed. Consequently, we will use the t
distribution to find the p-value for the test.

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Example 9-5: Solution
Step 3: The ≠ sign in the alternative hypothesis indicates
that the test is two-tailed

and df = n – 1 = 18 – 1 = 17
.02 < p-value < .05

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Figure 9.11 The Required p-Value

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Example 9-5: Solution
Step 4: For any α greater than .05, we will reject the null
hypothesis. For any α less than .02, we will not reject the
null hypothesis. For our example, α = .01, which is less
than the lower limit of the p-value ranges of .02. As a
result, we fail to reject H0 and conclude that the mean age
at which all children start walking is not significantly
different from 12.5 months.

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Example 9-6
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. A consumer
protection agency tested 45 such batteries to check this
claim. It found the mean life of these 45 batteries to be 63.4
months with a standard deviation of 3 months. Find the
p-value for the test that mean life of all such batteries is less
than 65 months. What will your conclusion be if the
significance level is 2.5%?

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Example 9-6: Solution
Step 1: H0 : μ ≥ 65 H1 : μ < 65
Step 2: The population standard deviation σ is not known and
the sample size is large (n > 30). Consequently, we will use the
t distribution to find the p-value for the test.

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Example 9-6: Solution
Step 3: The < sign in the alternative hypothesis indicates
that the test is left-tailed.

and df = n – 1 = 45 – 1 = 44
p-value < .001

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Figure 9.12 The Required p-Value

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Example 9-7
Refer to Example 9-5. A psychologist claims that the mean
age at which children start walking is 12.5 months. Carol
wanted to check if this claim is true. She took a random
sample of 18 children and found that the mean age at which
these children started walking was 12.9 months with a
standard deviation of .80 month. Using the 1% significance
level, can you conclude that the mean age at which all
children start walking is different from 12.5 months? Assume
that the ages at which all children start walking have an
approximately normal distribution.

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Example 9-7: Solution
Step 1: H0 : μ = 12.5 H1 : μ ≠ 12.5
Step 2: The population standard deviation σ is not known,
the sample size is small (n < 30), and the population is
normally distributed. Consequently, we will use the t
distribution to perform the test.

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Example 9-7: Solution
Step 3: The significance level = .01. The ≠ sign in the
alternative hypothesis indicates that the test is two-tailed
and the rejection region lies in both tails.

Area in each tail = α /2 = .01/2 = .005.

df = n – 1 = 18 – 1 = 17.
The critical values for t for 17 df and .005 area in each tail
are -2.898 and 2.898.

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Figure 9.13 The Required p-Value

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Example 9-7: Solution
Step 4:

The value of the test statistic t = 2.121 falls between the

two critical points, -2.898 and 2.898, which is the
nonrejection region. Consequently, we fail to reject H0.
As a result, we can state the difference between the
hypothesized population mean and the sample mean is so
small that it may have occurred because of sampling error.

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Example 9-8
The management at Massachusetts Savings Bank is always
concerned about the quality of service provided to its
customers. With the old computer system, a teller at this
bank could serve, on average, 22 customers per hour. The
management noticed that with this service rate, the waiting
time for customers was too long. Recently the management
of the bank installed a new computer system in the bank,
expecting that it would increase the service rate and
consequently make the customers happier by reducing the
waiting time.

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Example 9-8
To check if the new computer system is more efficient than
the old system, the management of the bank took a random
sample of 70 hours and found that during these hours the
mean number of customers served by tellers was 27 per
hour with a standard deviation of 2.5. Testing at the 1%
significance level, would you conclude that the new
computer system is more efficient than the old computer
system?

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Example 9-8: Solution
Step 1: H0 : μ = 22 H1 : μ > 22
Step 2: The population standard deviation σ is not known and
the sample size is large (n > 30). Consequently, we will use the
t distribution to perform the test.

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Example 9-8: Solution
Step 3: Significance level = .01. The > sign in the
alternative hypothesis indicates that the test is right-tailed
and the rejection region lies in the right tail.
Area in the right tail = α = .01.
df = n – 1 = 70 – 1 = 69.
The critical value for t for 69 df and .01 area in the right tail
is 2.382.

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Figure 9.14

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Example 9-8: Solution
Step 4:

The value of the test statistic t = 16.733 is greater than the

critical value of t = 2.382, and it falls in the rejection
region. Consequently, we reject H0. As a result, we
conclude that the value of the sample mean is too large
compared to the hypothesized value of the population
mean, and the difference between the two may not be
attributed to chance alone.

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Tests of Hypothesis for μ Using the t Distribution
What If the Sample Size Is Too Large?

1. Use the t value from the last row (the row of ∞) in Table
V of Appendix B.
2. Use the normal distribution as an approximation to the t
distribution.

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9.4 Hypothesis Tests About a Population Proportion: Large
Samples
Test Statistic
The value of the test statistic z for the sample proportion, ,
is computed as

The value of p that is used in this formula is the one from the
null hypothesis. The value of q is equal to 1 – p. The value of z
calculated for using the above formula is also called the
observed value of z.

Prem Mann, Introductory Statistics, 9/E

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Example 9-9
According to a Gallup poll conducted February 4 to March 7,
2014, 20% of traditional college graduates (those who earned
their degree before age 25) were emotionally attached to their
alma mater (www.gallup.com). Suppose this result is true for
the 2014 population of traditional college graduates. In a
recent random sample of 2000 traditional college graduates,
22% said that they are emotionally attached to their alma
mater. Find the p-value to test the hypothesis that the current
percentage of traditional college graduates who are
emotionally attached to their alma mater is different from
20%. What is your conclusion if the significance level is 5%?

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Example 9-9: Solution
Step 1: H0 : p = .20 H1 : p ≠ .20
Step 2: To check whether the sample is large, we calculate the
values of np and nq:
np = 2000(.20) = 400 > 5
nq = 2300(.80) = 1600 > 5
Consequently, we will use the normal distribution to find the
p-value for this test.

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Example 9-9: Solution
Step 3: The ≠ sign in the alternative hypothesis indicates
that the test is two-tailed.

p-value = 2(.01250) = .0250

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Copyright © 2015 John Wiley & Sons. All rights reserved.
Figure 9.15 The Required p-Value

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Example 9-9: Solution
Step 4: We can state that for any α greater than .0749 we
will reject the null hypothesis. For our example, α = .025,
which is less than the p-value of .0479. As a result, we fail
to reject H0 and conclude that the machine does not need
aa adjustment.

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Example 9-10
When working properly, a machine that is used to make
chips for calculators does not produce more than 4%
defective chips. Whenever the machine produces more than
4% defective chips, it needs an adjustment. To check if the
machine is working properly, the quality control
department at the company often takes samples of chips
and inspects them to determine if they are good or
defective. One such random sample of 200 chips taken
recently from the production line contained 12 defective
chips. Find the p-value to test the hypothesis whether or
not the machine needs an adjustment. What would your
conclusion be if the significance level is 2.5%?

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Example 9-10: Solution
Step 1: H0: p ≤ .04 H1: p > .04
Step 2: To check whether the sample is large, we calculate
the values of np and nq:
np = 200(.04) = 8 > 5
nq = 200(.96) = 192 > 5
Consequently, we will use the normal distribution to find the
p-value for this test.

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Example 9-10: Solution
Step 3: The > sign in the alternative hypothesis indicates
that the test is right-tailed.

p-value = .0749

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Figure 9.16 The Required p-Value

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Example 9-10: Solution
Step 4: We can state that for any α greater than .0749 we
will reject the null hypothesis, and for any α less than or
equal to .0749 we will not reject the null hypothesis. For
our example, α = .025, which is less than the p-value of
.0749. As a result, we fail to reject H0 and conclude that the
machine does not need an adjustment.

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Example 9-11
Refer to Example 9–9. According to a Gallup poll conducted
February 4 to March 7, 2014, 20% of traditional college
graduates (those who earned their degree before age 25)
were emotionally attached to their alma mater
(www.gallup.com). Suppose this result is true for the 2014
population of traditional college graduates. In a recent
random sample of 2000 traditional college graduates, 22%
said that they are emotionally attached to their alma mater.
Using a 5% significance level, can you conclude that the
current percentage of traditional college graduates who are
emotionally attached to their alma mater is different from
20%?

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Example 9-11: Solution
Step 1: H0 : p = .20 H1 : p ≠ .20
Step 2: To check whether the sample is large, we calculate the
values of np and nq:
np = 2000(.20) = 400 > 5
nq = 2000(.80) = 1600 > 5
Consequently, we will use the normal distribution to find the
p-value for this test.

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Example 9-11: Solution
Step 3: The ≠ sign in the alternative hypothesis indicates that
the test is two-tailed.
The significance level = .05. Therefore, the total area of the
two rejection regions is .05, and the rejection region in each
tail of the sampling distribution is α /2 = .05/2 = .025.
The critical values of z, obtained from the standard normal
distribution table, are -1.96 and 1.96, as shown in Figure
9.17.

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Figure 9.17 The Critical Values of z

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Example 9-11: Solution
Step 4:

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Example 9-11: Solution
Step 5: The value of the test statistic z = 2.24 falls in the
rejection region. As a result, we reject H0 and conclude that
the current percentage of traditional college graduates who
are emotionally attached to their alma mater is different
from .20. Consequently, we can state that the difference
between the hypothesized population proportion of .20 and
the sample proportion of .22 is too large to be attributed to
sampling error alone when α = .05.

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Example 9-12
Direct Mailing Company sells computers and computer parts
by mail. The company claims that at least 90% of all orders
are mailed within 72 hours after they are received. The
quality control department at the company often takes
samples to check if this claim is valid. A recently taken
sample of 150 orders showed that 129 of them were mailed
within 72 hours. Do you think the company’s claim is true?
Use a 2.5% significance level.

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Example 9-12: Solution
Step 1: H0 : p ≥ .90 H1 : p < .90
Step 2: To check whether the sample is large, we calculate
the values of np and nq:
np = 150(.90) = 135 > 5
nq = 150(.10) = 15 > 5
Consequently, we will use the normal distribution to make
the test.

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Example 9-12: Solution
Step 3: Significance level = .025. The < sign in the
alternative hypothesis indicates that the test is left-tailed,
and the rejection region leis in the left tail.
The critical values of z for .0250 area in the left tail is -1.96.

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Figure 9.18 The Critical Values of z

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Example 9-12: Solution
Step 4:

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Example 9-12: Solution
Step 5: The value of test statistic z = -1.63 is greater than
the critical value of z = -1.96, and it falls in the
nonrejection region. Therefore, we fail to reject H0. We can
state that the difference between the sample proportion and
the hypothesized value of the population proportion is
small, and this difference may have occurred owing to the
chance alone.

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
Case Study 9-2 Are Upper-Income People Paying Their Fair Share
in Federal Taxes?

Prem Mann, Introductory Statistics, 9/E

Copyright © 2015 John Wiley & Sons. All rights reserved.
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Prem Mann, Introductory Statistics, 9/E

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