Scribd
Upload
25 views4 pages

Section 4 Hypothesis Testing

Uploaded by

Mostafa Ahmed Majd
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
25 views4 pages

Section 4 Hypothesis Testing

Uploaded by

Mostafa Ahmed Majd
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 4

Cairo University, Probability and Statistics2,

Faculty of Computers and Information, Summer


Decision Support Department, Section 4

Hypothesis Testing

5 steps are required for hypothesis testing:


1- Determine the null and alternative hypothesis.
Null Hypothesis: The hypothesis to be tested, denoted Ho. Assumed to be true. (Null
hypothesis contains the equal sign.)
Alternative Hypothesis: A hypothesis considered to be an alternate to the null
hypothesis, denoted Ha. What we believe might actually be true. (Alternative hypothesis
contains an inequality , and )

2- Select the distribution to use and calculate the value of the test statistic. (all tests at the
end of the document)
3- Find the critical value of the test from the tables
4- Determine the rejection region using given α and take a Decision .
5- Draw a conclusion/ interpretation: the null hypothesis will be rejected if the test
statistic lies in the rejection region.

To calculate the test statistic, we need to determine the appropriate distribution to use based on
sample proposed in the problem → According to all types of distribution previously studied in
all sections.
Rejection region is either one tailed or two tailed. One tailed has 2 cases:
- Right tailed if the null hypothesis is less (alternative hypothesis is greater) than a value
(rejection region is to the right)
- Left tailed if the null hypothesis is greater (alternative hypothesis is less) than a value
(rejection region is to the left).
- Two tailed when the null hypothesis is equal to a value. In this case we use α/2 to
calculate test statistic.

Problem 1

An insurance company is reviewing its current policy rates. When originally setting the rates they
believed that the average claim amount was $1,800. They are concerned that the true mean is
actually higher than this, because they could potentially lose a lot of money. They randomly select
40 claims, and calculate a sample mean of $1,950. Assuming that the standard deviation of claims
is $500, and set = .05, test to see if the insurance company should be concerned.

Answer

We can infer that, the assumption is that the mean is less than or equal to1800 and the alternative hypothesis is that
the mean, the true mean is higher than 1800.
Cairo University, Probability and Statistics2,
Faculty of Computers and Information, Summer
Decision Support Department, Section 4

1. Set the null and alternative hypotheses

H0 : µ ≤ 1800
H1 : µ > 1800

2. Calculate the test statistic

x − 0 1950 −1800
Z calc = = =1.897
/ n 500 / 40

3. Calculate critical value

Z = Z0.95 = 1.65

4. Decision

We can see that z calc >z critical, thus reject H0

5. Interpretation

We can see that 1.897 > 1.65, thus our test statistic is in the rejection region. Therefore we reject
the null hypothesis. We can conclude that the insurance company concern is true.

Problem 2
A sample of 40 sales receipts from a grocery store has 𝑥 𝑏𝑎𝑟 = $137 and σ = $30.2. Use these
values to test whether or not the mean sales at the grocery store are different from $150, use α
= 0.01

Answer
The test required needs to determine whether the true mean is $150 or something else, therefore, the null hypothesis
μ = 150 and the alternative one μ ≠ 150 .

1) Null and alternative hypotheses:


H0: μ = 150
H1: μ ≠ 150
2) The distribution to use and the test statistic:
σ is known , therefore we use Z-Distribution
Cairo University, Probability and Statistics2,
Faculty of Computers and Information, Summer
Decision Support Department, Section 4

(x − μ) 137 − 150
Z= = = −2.722
 30.2
n 40

3) Calculate critical value


4) Determine the rejection region and take
a decisions :
Given α = 0.01, we find the Z value of
this α/2 considering that problem is two
Tailed problem
Z1-0.005(Right) = 2.58 or
Z0.005= -2.58
We can see that -2.722 < -2.58, thus our test statistic is in the rejection region.

5) Conclusion
Therefore we reject the null hypothesis in favor of the alternative., thus we have proven
that the mean sales at the grocery store is not $150.

Problem 3

Tests in Mr. Wildmans past statistics classes have scores with a standard deviation equal to 14.1.
One of his current classes now has 27 test scores with a standard deviation of 9.3. Use a 0.01 level
of significance to test the claim that this current class has less variation than past classes.

Answer:

n= 27, s = 9.3

2.99,26 = 12.2
Since c2 < critical, Thus we have enough evidence to reject H0. Thus can claim that the new class
has less variance than the past classes.
Cairo University, Probability and Statistics2,
Faculty of Computers and Information, Summer
Decision Support Department, Section 4

Single Sample Mean (σ unknown) and n>30


𝑿 − µ𝟎
𝒛 =
𝒔/ √𝒏

A Single Sample Variance (df ≤ 30)


H0: σ2 = σ02
𝝌2 = (n – 1) s2
σ0 2
A Single Sample Variance (df > 30)
H0: σ2 = σ02
z = 𝝌2 – (n – 1)
√ 2 (n – 1)

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy