Module 5

Hypothesis Testing I
➢ Introduction
➢ Types of errors
➢ critical region
➢ procedure of testing hypothesis
➢ Large sample tests
➢ Z test for Single Proportion
➢ Difference of Proportion
➢ mean and difference of means.
Introduction
The method of hypothesis testing uses tests of significance to determine the
likelihood that a statement (often related to the mean or variance of a given
distribution) is true, and at what likelihood we would, as statisticians, accept
the statement as true.

A hypothesis should be specific, clear and precise. It should state as far as

possible in mostly single terms so that the same is easily understood by all. It
should state the relationship between variables.

While understanding the mathematical concepts that go into the formulation

of these tests is important, knowledge of how to appropriately use each test
(and when to use which test) is equally important.
A Statistical hypothesis is a conjecture about a population parameter. This conjecture
may or may not be true.

The null hypothesis, symbolized by 𝐻0 , is a statistical hypothesis that states that

there is no difference between a parameter and a specific value or that there is no
difference between two parameters.

The alternative hypothesis, symbolized by 𝐻1 , is a statistical hypothesis that states a

specific difference between a parameter and a specific value or states that there is a
difference between two parameters.

In other words, we can say 𝐻1 is complementary to 𝐻0 .

Type of Tests
Two-Tailed Test:
A medical researcher is interested in finding out whether a new medication will have
any undesirable side effects. The researcher is particularly concerned with the pulse
rate of the patients who take the medication.
What are the hypotheses to test whether the pulse rate will be different from the
mean pulse rate of 82 beats per minute?
𝐻0 : 𝜇 = 82 and 𝐻1 : 𝜇 ≠ 82 :
This is a Two-Tailed test.

Right-Tailed Test:
A chemist invents an additive to increase the life of an automobile battery. If the
mean lifetime of the battery is 36 months, then his hypotheses are
𝐻0 : 𝜇 = 36 and 𝐻1 : 𝜇 > 36
Left-Tailed Test:
A contractor wishes to lower heating bills by using a special type of insulation in
houses. If the average of the monthly heating bills is Rs.78, her hypotheses about
heating costs will be
𝐻0 : 𝜇 = Rs.78 and 𝐻1 : 𝜇 < Rs. 78

A test statistic is computed after stating the null hypothesis. It is based on the
appropriate probability distribution.

A test statistics uses the data obtained from a sample to make a decision about
whether or not the null hypothesis should be rejected.

The numerical value obtained from a test statistic is called the calculated value.
Errors in Hypothesis Testing:
A Type I error occurs if one rejects the null hypothesis when it is true. This is similar
to a good product being rejected by the consumer and hence Type I error is also
known as producer's risk.
The level of significance is an important concept in hypothesis testing. It is always
some percentage. The level of significance is the maximum probability of rejecting a
null hypothesis when it is true and is denoted by 𝛼. The probability of making a
correct decision is 1 − 𝛼. The level of significance may be taken as 1% or 5% or 10%
(i.e., 𝛼 = 0.01 or 0.05 or 0.1). If we fix the level of significance at 5%, then the
probability of making type-I error is 0.05. This also means that we are 95% confident
of making a correct decision. When no level of significance is mentioned, it is taken as
= 0.05.
A Type II error occurs if one does not reject the null hypothesis when it is false. As this
error is similar to that of accepting a product of inferior quality, it is known as
consumer's risk. The probability of committing Type II error is denoted by 𝛽.
Types of Errors

Study reports Study reports

NO difference IS a difference
(Do not reject H0) (Reject H0)
H0 is true
Difference Does
NOT exist in X Type I
Error
population
HA is true
Difference DOES
exist in population
X Type II
Error
Important Tests of Hypothesis
For the purpose of testing a hypothesis, several tests of hypothesis were developed.
They can be classified as
Parametric test
Non-parametric test
The important parametric tests are
Z-test (for Large Samples)
t-test (for Small Samples)
F-test (for Small Samples)
Z-test

If the sample size n is greater than or equal to 30 (𝑛 ≥ 30), the sample is called a Large
Sample.
The z-test is a statistical test for the mean of a population. It can be used for large
sample or when the population is normally distributed and 𝜎 is known.
The critical values for some standard LOS's are given in the following table:
Table 1:
Procedure for Hypothesis Testing
The main question in hypothesis testing is whether to accept the null hypothesis or not
to accept the null hypothesis. The following tests are involved in hypothesis testing.

Step 1: State the Null 𝐻0 and Alternative 𝐻1 Hypotheses

Step 2: Decide the nature of test (one-tailed or two-tailed based on 𝐻1 )
Step 3: Obtain 𝑧𝛼 value which depends upon 𝛼 value and the nature of test.
Step 4: For large samples, when population n's standard deviation is known, the
ҧ
𝑥−𝜇
test statistics is Z = Τ . The corresponding distribution is normal.
𝜎 𝑛
Step 5: Comparison and Conclusion. (two tailed)
- If 𝑧 < 𝑧𝛼 , 𝐻0 is accepted or 𝐻1 is rejected, that is, there is no significant
difference at 𝛼 % LOS.
- If 𝑧 > 𝑧𝛼 , 𝐻0 is rejected or 𝐻1 is accepted, that is, there is significant difference
at 𝛼 % LOS.
Critical Region
A region corresponding to a statistics which amounts to rejection of the null
hypothesis 𝐻0 is known as the critical region. It is also called as the region of
rejection. The critical region is the region of the standard normal curve
corresponding to a predetermined level of significance. The region under the
normal curve which is not shaded is known as the acceptance region.
Test of Significance: Large Samples (Z-test)

• Test of significance for single mean

• Test of significance for difference of means of two large samples
• Test of significance for a single proportion
• Test of significance for difference of proportions
Test of significance for single mean
Let 𝑥1 , 𝑥2 , … , 𝑥𝑛 be a random sample of size 𝑛, drawn from a large population with
mean 𝜇 and variance σ2 .
Let 𝑥ҧ denote the mean of the sample and 𝑠 2 denote the variance of the sample.
We know that 𝑥ҧ ∼ 𝑁(𝜇, 𝜎 2 /𝑛). The standard normal variate corresponding to 𝑥ҧ is
ҧ
𝑥−𝜇
𝑍= ҧ
, where S.E.(𝑥)ҧ =𝜎/ 𝑛.
𝑆.𝐸.(𝑥)
We set up the null hypothesis that there is no difference between the sample
mean and the population mean. The test statistic is

ҧ
𝑥−𝜇
Z= If 𝜎 is known.
𝜎Τ 𝑛

ҧ
𝑥−𝜇
Z =Τ If 𝜎 is not known. Here, 𝑠 is the standard deviation of the sample.
𝑠 𝑛
Problem 1: The heights of college students in a city are normally distributed with S.D. 6
cms. A sample of 100 students have mean height 158 cms. Test the hypothesis that the
mean height of college students in the college is 160 cms.

Solution:
We have 𝑥ҧ = 158 (mean of the sample),
𝜇 = 160 (mean of the population), 𝜎 = 6, 𝑛 = 100.
Level of significance: 5%
𝐻0 : 𝜇 = 160, i.e., difference is not significant.
𝐻1 : 𝜇 ≠ 160
We apply the two tailed test.
ҧ
𝑥−𝜇 158−160
Test statistic is 𝑍 = = = −3.33.
𝜎/√𝑛 6/√100
∴ |𝑍| = 3.333
Table value of 𝑍 at 5% level of significance = 1.96. Since calculated value of 𝑍 at 5%
level of significance is greater than the table value of 𝑍, we reject 𝐻0 at 5% level of
significance.
Problem 2: A sample of 400 items is taken from a population whose standard deviation
is 10. The mean of the sample is 40. Test whether the sample has come from the
population with mean 38. Also calculate 95% confidence interval for the population
mean.
Solution:
𝐻0 : 𝜇 = 38
𝐻1 : 𝜇 ≠ 38
Level of significance: 5%
We apply the two tailed test.
ҧ
𝑥−𝜇 40−38
Test statistic is 𝑍 = = = 4.
𝜎/√𝑛 10/√400
∴ |𝑍| = 4
Table value of 𝑍 at 5% level of significance = 1.96. Since calculated value of 𝑍 at 5%
level of significance is greater than the table value of 𝑍, we reject 𝐻0 at 5% level of
significance. 95% confidence interval for the population mean is given by
𝜎 10
𝑥ҧ ± 𝑧𝛼 = 40 ± 1.96 × = 39.02,40.98
𝑛 400
Problem 3:The mean of a certain normally distributed production process is known to
be 50 with a standard deviation of 2.5. The production manager may welcome any
change in the mean value towards the higher side but would like to safeguard against
decreasing values of mean. He takes a sample of 12 items that gives a mean value of
46.5. What inference should the manager take for the population process on the basis
of sample results. Use 5% level of significance for the purpose.
Solution:
𝐻0 : 𝜇 = 50
𝐻1 : 𝜇 < 50
Level of significance: 𝛼 = 0.05
ҧ
𝑥−𝜇 46.5−50
Test statistic is 𝑍 = = = −4.854.
𝜎/√𝑛 2.5/√12
∴ |𝑍| = 4.854

Table value of 𝑍 at 5% level of significance = −1.645. Since calculated value of 𝑍 at 5%

level of significance is greater than the table value of 𝑍, we reject 𝐻0 at 5% level of
significance.
Problem 4: A sample of 900 members has a mean of 3.4 cms and a S.D. 2.61 cms. Is
the sample from a large population of mean 3.25cm?

Solution: Given : 𝑛 = 900, 𝜇 = 3.25, 𝑥᪄ = 3.4 cm, 𝜎 = 2.61, 𝑠 = 2.61

Null hypothesis ∶ 𝐻𝑜 : 𝜇 = 3.25
Alternative hypothesis: 𝐻1 : 𝜇 ≠ 3.25
᪄
𝑥−𝜇 3.4−3.25
Test statistic (C.V) ∶ 𝑧 = = = 1.724
𝑠/ 𝑛 2.61/ 900
Z = 1.724
Tabulated Value (T.V) : 𝑍 at 5% level of significance is 1.96
Conclusion ∶ C. V < T. V
we accept the null hypothesis 𝐻𝑜 .
Therefore, the samples has been drawn from the population mean 𝜇 = 3.25
Test of significance for difference of means of two large samples

Let 𝑥1 be the mean of an independent random sample of size 𝑛1 from a population with
mean 𝜇1 and variance 𝜎12 . Again, let 𝑥2 be the mean of an independent random sample
of size 𝑛2 from a population with mean 𝜇2 and variance 𝜎22 . Here, 𝑛1 and 𝑛2 are large.
Clearly,

Hence, under the null hypothesis 𝐻0 : 𝜇1 − 𝜇2 = 𝛿0 , the test statistic is

𝑥1 − 𝑥2 − 𝛿0
𝑧=
𝜎12 𝜎22
+
𝑛1 𝑛2
If 𝜎1 and 𝜎2 are not known use the samples’ standard deviation, then the test
statistic is
𝑥1 − 𝑥2 − 𝛿0
𝑧=
𝑠12 𝑠22
+
𝑛1 𝑛2

If 𝜎1 = 𝜎2 = 𝜎, then the test statistic is

𝑥1 − 𝑥2 − 𝛿0
𝑧=
1 1
𝜎 +
𝑛1 𝑛2
If 𝜎1 = 𝜎2 = 𝜎 and 𝜎 is not known, we compute 𝜎 2 by using the formula
2 2
𝑛1 𝑠1 + 𝑛 2 𝑠2
𝜎2 = .
𝑛1 + 𝑛2
In this case, the test statistic is
𝑥1 − 𝑥2 − 𝛿0
𝑧=
𝑛1 𝑠12 + 𝑛2 𝑠22 1 1
+
𝑛1 + 𝑛2 𝑛1 𝑛2
Problem 1: Random samples drawn from two places gave the following data relating
to the heights of children

Test at 5% level that the mean height is the same for the children at two places.
Problem 2: The means of 2 large samples 1000 and 2000 members are 67.5 inches
and 68.0 inches respectively. Can the samples be regarded as drawn from the same
population of S.D. 2.5 inches.

Solution : Sample sizes 𝑛1 = 1000, 𝑛2 = 2000.

Sample mean 𝑥᪄1 = 67. 5 inches, 𝑥᪄2 = 68 inches
Population S.D 𝜎 = 2.5 inches
Null Hypothesis ∶ 𝐻𝑜 : 𝜇1 = 𝜇2
Alternative hypothesis: 𝐻1 : 𝜇1 ≠ 𝜇2
𝑥᪄1 −𝑥᪄2 67.5−68
Test statistic (C.V) ∶ 𝑧 = 2 2 = 2 2
= −5.16 |𝑧| = 5.16
𝜎 𝜎 (2.5) (2.5)
+
𝑛 1 𝑛2 +
1000 2000
Tabulated value (T.V): 𝑧 at 5% level of significance is 1.96
Conclusion ∶ C.V > T.V
We reject the null hypothesis 𝐻𝑜 .
Therefore, the samples are not drawn from the same population.
Problem: Two independent random samples of sizes 10 and 12 from N 𝜇1 , 𝜎12 = 4 and
N 𝜇2 , 𝜎22 = 9 give the sample means 20 and 22 respectively. Test the hypothesis that
𝜇1 − 𝜇2 = 5 against the alternative that 𝜇1 − 𝜇2 < 5 at 10% level.

Solution: The appropriate test-statistic is

𝑥᪄1 − 𝑥᪄2 − 5
𝜏=
𝜎12 𝜎22
𝑛1 + 𝑛2

which follows, under H0 , standard normal distribution.

From the given data we have,
𝑛1 = 10, 𝑛2 = 12, 𝜎12 = 4, 𝜎22 = 9, 𝑥᪄1 = 20 and 𝑥᪄2 = 22
Hence
(20 − 22) − 5 7
𝜏= =− = −6.53
4 9 1.15
+
10 12
Here 𝜏(=-6.53)<-1.28. So, reject 𝐻0 at 10% LOS and conclude that 𝜇1 − 𝜇2 < 5 .
Test of significance of the difference between sample proportion and
population proportion (single proportion)
Let 𝑋 be the number of successes in 𝑛 independent Bernoulli trials in which the probability
of success for each trial is a constant = 𝑃 (say). Then it is known that 𝑋 follows a binomial
distribution with mean 𝐸(𝑋) = 𝑛 𝑃 and variance 𝑉(𝑋) = 𝑛 𝑃 𝑄

When 𝑛 is large, 𝑋 follows 𝑁 𝑛𝑃, 𝑛𝑃𝑄 , i.e. a normal distribution with mean 𝑛 𝑃 and
𝑋 𝑃𝑛 𝑛𝑃𝑄
S.D. 𝑛𝑃𝑄, where 𝑄 = 1 − 𝑃. follows 𝑁 𝑛
, 𝑛2
𝑛
Now 𝑋𝑛 is the proportion of successes in the sample consisting of 𝑛 trials, that is denoted by
𝑃𝑄
𝑝. Thus the sample proportion 𝑝 follows 𝑁 𝑃, 𝑛
. Therefore test statistic
𝑝−𝑃
𝑧= ~𝑁(0,1).
𝑃𝑄
𝑛
If | 𝑧 | ≤ 𝑧𝛼 , the difference between the sample proportion 𝑝 and the population
proportion 𝑃 is not significant at α% LOS.

Note: When P is not known, the 95 percent confidents limits for P are given by
Problem 1: If 20 people were attacked by a disease and only 18 survived, will you reject
the hypothesis that the survival rate if attacked by this disease is 85% in favor of the
hypothesis that is more at 5% level. (Assume population follows Normal distribution)

Solution: Number of people survived= 𝑥 = 18.

Size of the sample = 𝑛 = 20.
𝑥 18
𝑝 = Proportion of the people survived= = = 0.9
𝑛 20
It is given that= 𝑃 = 85% = 0.85. 𝑄 = 1 − 𝑃 = 1 − 0.85 = 0.15
Null hypothesis: 𝐻0 : 𝑃 = 0.85
Alternative hypothesis: 𝐻1 : 𝑃 > 0.85
Level of significance = 𝛼 = 0.05
𝑝−𝑃
Test statistic: 𝑧 = = 0.6265.
𝑃𝑄
𝑛
Table value of 𝑧 = 1.645.
Calculated value of 𝑧 is less than the table value of 𝑧 at 5% level of significance. Null
hypothesis is accepted.
Problem 2: In a city, a sample of 1000 people were taken and out of them 540 are
vegetarians and the rest are non-vegetarians. Can we say that both habits of eating
(vegetarian or non-vegetarian) are equally popular in the city at 1% level of significance.
Solution: Number of people are vegetarians = 𝑥 = 540.
Size of the sample = 𝑛 = 1000.
540
𝑝 = Proportion of the people vegetarians = = 0.54
1000
Population proportion(P) = 0.5. 𝑄 = 1 − 𝑃 = 1 − 0. 5 = 0.5
Null hypothesis: 𝐻0 : 𝑃 = 0.5
Alternative hypothesis: 𝐻1 : 𝑃 ≠ 0.5
Level of significance = 𝛼 = 0.01
𝑝−𝑃
Test statistic: 𝑧 = = 2.532.
𝑃𝑄
𝑛
Table value of 𝑧 = 2.58.
Calculated value of 𝑧 is less than the table value of 𝑧 at 5% level of significance. Null
hypothesis is accepted.
Test of significance for difference of proportions

Suppose two samples of sizes 𝑛1 and 𝑛2 are drawn from two different populations.
To test the significance of difference between the two proportions, we consider the
following cases.

Case-I When the population proportions 𝑃1 and 𝑃2 are known:

In this case 𝑄1 = 1 − 𝑃1 and 𝑄2 = 1 − 𝑃2 . The test statistic is
𝑝1 − 𝑝2 − (𝑃1 − 𝑃2 ) In practice, the true proportions (𝑃1 and 𝑃2 ) are
𝑍=
𝑃1 𝑄1 𝑃2 𝑄2 usually unknown. Then it is a standard practice
+ to work with the respective estimators (Case II).
𝑛1 𝑛2
Case-II When the population proportions 𝑃1 and 𝑃2 are not known but sample
proportions 𝑝1 and 𝑝2 are known:
𝑝1 − 𝑝2 − (𝑃1 − 𝑃2 )
𝑍=
𝑝1 𝑞1 𝑝2 𝑞2
+
𝑛1 𝑛2
 𝑥1 +𝑥2
Case-III Method of pooling: If 𝑃1 =𝑃2 , a pooled estimator for 𝑃 can be used, 𝑃 = ,
𝑛1 +𝑛2
where 𝑥1 and 𝑥2 are the numbers of successes in each of the two samples.
The test statistic in this case is
𝑝1 −𝑝2
𝑍= , Q=1-P
1 1
𝑃𝑄 +
𝑛 1 𝑛2
 Problem 3: In a large city 𝐴, 20 per cent of a random sample of 900 school boys had a
slight physical defect. In another large city 𝐵, 18.5 percent of a random sample of
1600 school boys had the same defect. Is the difference between the proportions
significant? Use method of pooling.
Solution : 𝑝1 = 0.2, 𝑝2 = 0.185, 𝑛1 = 900 and 𝑛2 = 1600
𝐻0 : 𝑃1 = 𝑃2
𝐻1 : 𝑃1 ≠ 𝑃2
Two tailed test is to be used.
Let L.O.S. be 5% ∴ 𝑧𝛼 = 1.96

𝑛 𝑝 +𝑛 𝑝 180+296
Since 𝑃, the population proportion, is not given, we estimate it as 𝑃ƶ = 1 1 2 2 = = 0.1904
𝑛1 +𝑛2 900+1600
So, we have
𝑝1 − 𝑝2 0.2 − 0.185
𝑧= = = 0.92
1 1 1 1
𝑃𝑄 𝑛 + 𝑛 0.1904 × 0.8096 × +
1 2 900 1600
|𝑧| ≤ 𝑧𝛼 . Therefore The difference between 𝑝1 and 𝑝2 is not significant at 5 percent level.
Problem 4: A vote is to be taken among the residents of a town and the surrounding county to determine
whether a proposed chemical plant should be constructed. The construction site is within the town limits, and
for this reason many voters in the county believe that the proposal will pass because of the large proportion
of town voters who favor the construction. To determine if there is a significant difference in the proportions
of town voters and county voters favoring the proposal, a poll is taken. If 120 of 200 town voters favor the
proposal and 240 of 500 county residents favor it, would you agree that the proportion of town voters
favoring the proposal is higher than the proportion of county voters? Use an α = 0.05 level of significance and
method of pooling.
Solution: Let P1 and P2 be the true proportions of voters in the town and county, respectively, favoring the
proposal.
1. 𝐻0 : 𝑃1 = 𝑃2 .
2. 𝐻1: 𝑃1 > 𝑃2 .
3. α = 0.05.
4. Critical region: z > 1.645.
𝑥 120 𝑥 240 𝑥 +𝑥 120+240
5. Computations: 𝑝1 = 1 = = 0.60, 𝑝2 = 2 = = 0.48, and 𝑝 = 1 2 = = 0.51.
𝑛1 200 𝑛2 500 𝑛1 +𝑛2 200+500
0.60 − 0.48
Therefore, 𝑧 = = 2.9,
1 1
0.51 0.49 +
200 500
6. Decision: Reject H0 and agree that the proportion of town voters favoring the proposal is higher than
the proportion of county voters
Case-IV Test the significance difference between 𝑝1 and P:
𝑛1 𝑝1 + 𝑛2 𝑝2
𝑃=
𝑛1 + 𝑛2
The test statistic in this case is

𝑝1 − 𝑃
𝑍=
𝑛2 𝑃𝑄
𝑛1 (𝑛1 + 𝑛2 )
Problem 5: In a random sample of 400 student of the university teaching department, it was found
that 300 students failed in the examination. In another sample of 500 students of the affiliated
colleges the number of failures in the same examination was found to be 300. Find out whether the
proportion of failures in the university teaching departments significantly greater than the
proportion of failures in the university teaching departments and affiliated colleges taken together.

Solution:
300 300
Given: 𝑛1 = 400, 𝑛2 = 500, 𝑝1 = = 0.75, 𝑝2 = = 0.6
400 500
300 300
𝑛1 𝑝1 + 𝑛2 𝑝2 400 + 500
400 500
𝑝= = = 0.667, 𝑞 = 0.333
𝑛1 + 𝑛2 400 + 500
Null hypothesis 𝐻𝑜 : 𝑝1 ≤ 𝑝, 𝐻1 : 𝑝1 > 𝑝
𝑝1 −𝑝 0.75−0.667
Test Statistic ∶ 𝑍 = 𝑛 𝑝𝑞
= 500×0.667×0.333
= 4.74
2
𝑛1 𝑛1 +𝑛2 400(400+500)

Tabulated value : 𝑧 at 5% level of significance is 1.645

Conclusion ∶ C. V > T.V
We reject the null hypothesis 𝐻𝑜 .
Therefore, the proportion of failures in the affiliated colleges is greater than the proportion of failures
in university departments and affiliated colleges taken together.
Practice Problems
Exercise 1: A company claims that 70% of their customers are satisfied with their product. A sample of
200 customers is taken, and 150 of them report being satisfied. Test the company's claim at a 5% level of
significance.
Exercise 2: A researcher claims that a new drug has a success rate of at least 60% in treating a certain
disease. A sample of 100 patients is taken, and 55 of them are successfully treated. Test the researcher's
claim at a 1% level of significance.
Exercise 3: A survey claims that 45% of adults in a certain country support a particular political party. A
sample of 500 adults is taken, and 240 of them support the party. Test the survey's claim at a 10% level
of significance.
Exercise 4: A company believes that their product is more popular among men than women. A sample
of 200 men and 150 women were surveyed, and 140 men and 90 women reported using the product.
Test the company's claim at a 5% level of significance.
Exercise 5: A researcher wants to know if there is a difference in the proportion of smokers between two
cities. A sample of 500 people from City A and 600 people from City B were surveyed, and 100 people
from City A and 150 people from City B reported smoking. Test the researcher's hypothesis at a 1% level
of significance.