Chapter 9

Hypothesis Testing

Copyright ©2017 McGraw-Hill Education. All rights reserved.

Chapter Outline
9.1 The Null and Alternative Hypotheses and Errors
in Hypothesis Testing
9.2 z Tests about a Population Mean: σ Known
9.3 t Tests about a Population Mean: σ Unknown
9.4 z Tests about a Population Proportion
9.5 Type II Error Probabilities and Sample Size
Determination (Optional)
9.6 The Chi-Square Distribution (Optional)
9.7 Statistical Inference for a Population Variance
(Optional)

9-2
LO 9-1: Set up
appropriate null and
alternative
hypotheses. 9.1 Null and Alternative Hypotheses
and Errors in Hypothesis Testing
 One-Sided, “Greater Than” Alternative
H0: μ  μ0 vs. Ha: μ > μ0
 One-Sided, “Less Than” Alternative
H0 : μ  μ0 vs. Ha : μ < μ0
 Two-Sided, “Not Equal To” Alternative
H0 : μ = μ0 vs. Ha : μ  μ0

where μ0 is a given constant value (with the

appropriate units) that is a comparative value
9-3
LO9-1

The Idea of a Test Statistic

9-4
LO 9-2: Describe
Type I and Type II
errors and their
probabilities.
Type I and Type II Errors

9-5
Table 9.1
LO9-2

Typical Values
 Low alpha gives small chance of rejecting a
true H0
 Typically,  = 0.05
 Strong evidence is required to reject H0
 Usually choose α between 0.01 and 0.05
  = 0.01 requires very strong evidence is to
reject H0
 Tradeoff between  and β
 For fixed n, the lower , the higher β

9-6
LO 9-3: Use critical
values and p-values to
perform a z test about a
population mean when
σ is known. 9.2 z Tests about a Population
Mean: σ Known
 Test hypotheses about a population mean
using the normal distribution
 Called z tests
 Require that the true value of the population
standard deviation σ is known
 In most real-world situations, σ is not known
 When σ is unknown, test hypotheses about a
population mean using the t distribution
 Here, assume that we know σ

9-7
LO9-3
Steps in Testing a “Greater Than”
Alternative
1. State the null and alternative hypotheses
2. Specify the significance level alpha ()
3. Select the test statistic
4. Determine the critical value rule for rejecting H0
5. Collect the sample data and calculate the value of
the test statistic
 Decide whether to reject H0 by using the test statistic
and the critical value rule
 Interpret the statistical results in managerial terms
and assess their practical importance

9-8
LO9-3
Steps in Testing a “Greater Than”
Alternative in Trash Bag Case #1
1. State the null and alternative hypotheses
H0:   50
Ha:  > 50
2. Specify the significance level α = 0.05
3. Select the test statistic

x  50 x  50
z 
x  n

9-9
LO9-3
Steps in Testing a “Greater Than”
Alternative in Trash Bag Case #2
4. Determine the critical value rule for deciding
whether or not to reject H0
 Reject H0 in favor of Ha if the test statistic z
is greater than the rejection point zα
 This is the critical value rule
 In the trash bag case, the critical value rule
is to reject H0 if the calculated test statistic z
is > 1.645

9-10
LO9-3
Steps in Testing a “Greater Than”
Alternative in Trash Bag Case #3

9-11
Figure 9.1
LO9-3
Steps in Testing a “Greater Than”
Alternative in Trash Bag Case #4
 Decide whether to reject H0 by using the test
statistic and the rejection rule
 Compare the value of the test statistic to the
critical value according to the critical value
rule
 In the trash bag case, z = 2.20 is greater
than z0.05 = 1.645
 Therefore reject H0: μ ≤ 50 in favor of
Ha: μ > 50 at the 0.05 significance level
 Interpret the statistical results in managerial
terms and assess their practical importance
9-12
LO9-3

Effect of α
 At α = 0.01, the rejection point is z0.01 = 2.33
 In the trash example, the test statistic
z = 2.20 is < z0.01 = 2.33
 Therefore, cannot reject H0 in favor of Ha at
the α = 0.01 significance level
 This is the opposite conclusion reached with
α=0.05
 So, the smaller we set α, the larger is the
rejection point, and the stronger is the
statistical evidence that is required to reject
the null hypothesis H0
9-13
LO9-3

The p-Value
 The p-value is the probability of the obtaining
the sample results if the null hypothesis H0 is
true
 Sample results that are not likely if H0 is true
have a low p-value and are evidence that H0
is not true
 The p-value is the smallest value of α for
which we can reject H0
 The p-value is an alternative to testing with a
z test statistic
9-14
LO9-3
Steps Using a p-value to Test a
“Greater Than” Alternative

9-15
LO9-3
Steps in Testing a “Less Than”
Alternative in Payment Time Case #1
1. State the null and alternative hypotheses
 H0:  ≥ 19.5 vs.
 Ha:  < 19.5
2. Specify the significance level α = 0.01
3. Select the test statistic
x  19.5 x  19.5
z 
x  n

9-16
LO9-3
Steps in Testing a “Less Than”
Alternative in Payment Time Case #2
4. Determine the rejection rule for deciding
whether or not to reject H0
 The rejection rule is to reject H0 if the
calculated test statistic –z is less than –2.33
5. Collect the sample data and calculate the
value of the test statistic
x  19.5 18.1077  19.5
z   2.67
 n 4.2 65

9-17
LO9-3
Steps in Testing a “Less Than”
Alternative in Payment Time Case #3
 Decide whether to reject H0 by using the test
statistic and the rejection rule
 In the payment time case, z = –2.67 is less
than z0.01 = –2.33
 Therefore reject H0: μ ≥ 19.5 in favor of
Ha: μ < 19.5 at the 0.01 significance level
 Interpret the statistical results in managerial
terms and assess their practical importance

9-18
LO9-3
Steps Using a p-value to Test a
“Less Than” Alternative
4. Collect the sample data, compute the value
of the test statistic, and calculate the p-
value by corresponding to the test statistic
value
5. Reject H0 if the p-value is less than α

9-19
LO9-3
Steps in Testing a “Not Equal To”
Alternative in Valentine Day Case #1
1. State null and alternative hypotheses
 H0:  = 330 vs.
 Ha:  ≠ 330
2. Specify the significance level α = 0.05
3. Select the test statistic

x  330 x  330
z 
x  n

9-20
LO9-3
Steps in Testing a “Not Equal To”
Alternative in Valentine Day Case #2
4. Determine the rejection rule for deciding
whether or not to reject H0
 Rejection points are zα=1.96,–zα=– 1.96
 Reject H0 in favor of Ha if the test statistic z
satisfies either:
 z greater than the rejection point zα/2, or
 –z less than the rejection point –zα/2

9-21
LO9-3
Steps in Testing a “Not Equal To”
Alternative in Valentine Day Case #3
5. Collect the sample data and calculate the
value of the test statistic
x  330 326  330
z   1.00
 n 40 100

 Decide whether to reject H0 by using the test

statistic and the rejection rule
 Interpret the statistical results in managerial
terms and assess their practical importance

9-22
LO9-3
Steps Using a p-value to Test a
“Not Equal To” Alternative
4. Collect the sample data and compute the
value of the test statistic
 Calculate the p-value by corresponding to
the test statistic value
 The p-value is 0.1587 · 2 = 0.3174
5. Reject H0 if the p-value is less than 

9-23
LO9-3
Interpreting the Weight of Evidence
Against the Null Hypothesis
 If p < 0.10, there is some evidence to
reject H0
 If p < 0.05, there is strong evidence to
reject H0
 If p < 0.01, there is very strong evidence to
reject H0
 If p < 0.001, there is extremely strong
evidence to reject H0

9-24
LO 9-4: Use critical
values and p-values to
perform a t test about a
population mean when
σ is unknown. 9.3 t Tests about a Population
Mean: σ Unknown
 Suppose the population being sampled is
normally distributed
 The population standard deviation σ is
unknown, as is the usual situation
 If the population standard deviation σ is
unknown, then it will have to estimated from a
sample standard deviation s
 Under these two conditions, have to use the t
distribution to test hypotheses

9-25
LO9-4
Defining the t Random Variable:
σ Unknown
𝑥−𝜇
 Define a new random variable 𝑡 = 𝑠
𝑛

 The sampling distribution of this random

variable is a t distribution with n – 1 degrees
of freedom

9-26
LO9-4

Defining the t Statistic: σ Unknown

 Let x be the mean of a sample of size n with
standard deviation s
 Also, µ0 is the claimed value of the population
mean
𝑥−𝜇0
 Define a new test statistic 𝑡 = 𝑠
𝑛
 If the population being sampled is normal,
and s is used to estimate σ, then …
 The sampling distribution of the t statistic is a
t distribution with n – 1 degrees of freedom

9-27
LO9-4
t Tests about a Population Mean:
σ Unknown

9-28
LO 5: Use critical
values and ρ-values
to perform a large
sample z test about a
population proportion.
9.4 z Tests about a Population
Proportion

9-29
LO9-5

Example 9.6: The Cheese Spread Case

9-30
LO 9-6: Calculate Type
II error probabilities and
the power of a test, and
determine sample size
(Optional). 9.5 Type II Error Probabilities and
Sample Size Determination (Optional)
 Want the probability β of not rejecting a false
null hypothesis
 That is, want the probability β of committing a
Type II error

 1 - β is called the power of the test

9-31
LO9-6

Calculating β
 Assume that the sampled population is
normally distributed, or that a large sample is
taken
 Test…
 H0: µ = µ0 vs
 Ha: µ < µ0 or Ha: µ > µ0 or Ha: µ ≠ µ0
 Want to make the probability of a Type I error
equal to α and randomly select a sample of
size n

9-32
LO9-6

Calculating β Continued
 Probability β of a Type II error corresponding
to the alternative value µa for µ is the area
under the standard normal curve to the left of
∗ 𝜇0 −𝜇𝑎
𝑧 − 𝜎
𝑛

 Here z* equals zα if the alternative hypothesis

is one-sided (µ < µ0 or µ > µ0)
 Also z* ≠ zα/2 if the alternative hypothesis is
two-sided (µ ≠ µ0)

9-33
LO9-6

Sample Size
 Assume the sampled population is normally
distributed, or that a large sample is taken
 Test H0: μ = μ0 vs.
Ha: μ < μ0 or Ha: μ > μ0 or Ha: μ ≠ μ0
 Want to make the probability of a Type I error
equal to α and the probability of a Type II
error corresponding to the alternative value μα
for μ equal to β
∗ 2 2
𝑧 +𝑧𝛽 𝜎
 Sample size is 𝑛 =
𝜇0 −𝜇𝑎 2

9-34
LO 9-7: Describe the
properties of the chi-
square distribution
and use a chi-square
table (Optional). 9.6 The Chi-Square Distribution
(Optional)

 The chi-square ² distribution depends on the

number of degrees of freedom
 A chi-square point ²α is the point under a chi-
square distribution that gives right-hand tail
area 

9-35
Figures 9.9 and 9.10
LO 9-8: Use the chi-
square distribution to
make statistical
inferences about
population variances
(Optional).
9.7 Statistical Inference for
Population Variance (Optional)
 If s2 is the variance of a random sample of n
measurements from a normal population with
variance σ2
 The sampling distribution of the statistic
2 𝑛−1 𝑠 2
𝜒 = is a chi-square distribution with
𝜎02
(n – 1) degrees of freedom
 Can calculate confidence interval and
perform hypothesis testing

9-36
LO9-8
Confidence Interval for Population
Variance

9-37
LO9-8
Hypothesis Testing for Population
Variance

9-38
 Selecting an Appropriate Test Statistic for
a Test about a Population Mean

9-39
Figure 9.13