Narsee Monjee Institute of Management Studies (Deemed University)

Statistical Methods- Assignment-2(Testing Hypothesis One Sample)

1. A random sample of n observation is selected from a population with unknown mean  and variance 2. For each of the
following situations, specify the test statistic and reject region.

2. A random sample of n observations is selected from a binominal population. For each of the following situations, specify
the rejection region, test statistic value, and conclusion:

3. Sports and media magnate Ned Sterner is interested in purchasing the Atlanta Stalwarts, if he can be reasonably
certain that operating the team will not be too costly. He figures that average attendance would have to be about
28.500 fans per game to make the purchase attractive to him. Ned randomly chooses 64 home games over the past
4 years and finds from figures reported in Sporting Reviews that average attendance at these games was 26.100. A

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study he commissioned the last time he purchased a team showed that the population standard deviation for

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attendance at similar events had been quite stable for the past 10 years at about 6,000 fans. Using 5% LOS, should

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Ned purchase the Stalwarts? Can you think of any reasons(s) why your conclusion might not be valid?

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Evidenc
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Sample
size 64 n
Sample
Mean 26100 x-bar
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aC s

 Known; Normal Population or Sample Size >= 30

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Population
Stdev. 6000 
Test Statistic -3.2000 z
At an 
ed d

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Null Hypothesis

H0:   28500
H0:  28500
is
Th

Critical value Z tab = - 1.645 hence reject Ho => Do not purchase the rights

4. Computing World has asserted that the average owner of a personal computer spends 23.9 hours per week using
his or her machine, with a standard deviation of 12.6 hours per week. A random sampling of 81 of its subscribers
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revealed a sample mean usage of 27.2 hours per week. On the basis of this sample, is it reasonable to conclude
(using 2 standard errors as the decision criterion) that Computing World’s subscribers are different from average
personal computer owners?

Evidence
Sample
size 81 n
Sample
Mean 27.2 x-bar
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 Known; Normal Population or Sample Size >= 30

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Population
Stdev. 12.6 
Test Statistic 2.3571 z
At an 
of
Null Hypothesis p-value 5%
H0:  = 23.9 0.0184 Reject

Critical value Z tab = 2 hence reject Ho => They are different

5. An automobile manufacturer claims that a particular model gets 28 miles to the gallon. The Environmental
Protection Agency, using a sample of 49 automobiles of this model, finds the sample mean to be 26.8 miles per
gallon. From previous studies, the population standard deviation is known to be 5 miles per gallon. Could we
reasonably expect (within 2 standard errors) that we could select such a sample if indeed the population mean is
actually 28 miles per gallon?

Evidence

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Sample

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size 49 n
Sample

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Mean 26.8 x-bar

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 Known; Normal Population or Sample Size >= 30
Population rs e
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Stdev. 5 
Test Statistic -1.6800 z
At an 
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Null Hypothesis p-value 5%
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H0:  28 0.9535

Critical value Z tab = - 2 hence do not reject Ho => Claim can not be denied.
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6. For the following cases,test the hypothesis at los=5%

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(a) H0:  = 27, H1:  ≠ 27, = 30, s= 4, n = 25

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(b) H0:  = 98.6, H1:  > 98.6, = 99.1, = 10.5, n = 50
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(c) H0:  = 3.5, H1:  < 3.5, = 2.8, s = 1.4, n = 18
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x
(d) H0:  = 382, H1:  ≠ 382, = 363,  = 68, n = 12
x
(e) H0:  = 57, H1:  > 57, = 65,s = 12, n = 42
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7. For a sample of 60 women taken from a population of over 5,000 enrolled in a weight-reducing program at a
nationwide chain of health spas, the sample mean diastolic blood pressure is 101 and the sample standard deviation
is 42. At a significance level of 0.02, can you conclude that, on average, the women enrolled in the program have
diastolic blood pressure that exceeds the value of 75 recommended by various medical societies?
Evidence
Sample
size 60 n
Sample
Mean 101 x-bar
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 Known; Normal Population or Sample Size >= 30
Stdev. 42 
Test Statistic 4.7951 z
At an 
of
Null Hypothesis p-value 5%

H0:  75 0.0000 Reject

Critical value Z tab = 2.05 hence reject Ho => The pressure is higher than the recommended value.

8. The data-processing department of a large life insurance company has installed new color video display terminals
to replace the monochrome units it previously used. The 95 operators trained to use the new machines averaged 7.2
hours before achieving a satisfactory level of performance. Their sample variance was 16.2 squared hours. Long
experience with operators on the old monochrome terminals showed that they averaged 8.1 hours on the machines
before their performances were satisfacotry. At the 0.01 significance level, should the supervisor of the department
concude that the new terminals are easier to learn to operate?

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Evidence
Sample

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size 95 n

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Sample
Mean 7.2 x-bar

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 Known; Normal Population or Sample Size >= 30
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4.0249
Stdev. 2 
Test Statistic -2.1794 z
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At an 
aC s

of
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Null Hypothesis p-value 1%

H0:  = 8.1 0.0293
H0:   8.1 0.0146
H0:  8.1 0.9854
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Critical value Z tab = -2.33 hence do not reject Ho => It cannot be said that the new terminals are easier to operate.
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9. As the bottom fell out of the oil market in early 1986, educators in Texas worried about how the resulting loss of
state revenues (estimated to be about $100 million for each $1 decrease in the price of a barrel of oil) would affect
their budgets. The state board of education felt the situation would not be critical so long as they could be
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reasonably certain that the price would stay above $ 18 per barrel. They surveyed 13 randomly chosen oil
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economists and asked them to predict how low the price would fall before it bottomed out. The 13 predictions
average $21.6 and the sample s.d was $4.65. at los =1% is the average prediction significantly higher than $
18.00? Should the broad of education conclude that a budget crisis is unlikely? Explain.
Evidence
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Sample
size 13 n
Sample
Mean 21.6 x-bar
Sample
Stdev. 4.65 s

 Unknown; Population Normal

Test
Statistic 2.7914 t
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At an 

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of
Null Hypothesis p-value 1%

H0:  18 0.0082 Reject

Critical value t table = 2.681=> Reject Ho => The average prediction is significantly higher.

10. A television documentary on overeating claimed that Americans are about 10 pounds overweight on average. To
test this claim, eighteen randomly selected individuals were examined, and their average excess weight was found
to be 12.4 pounds, with a sample standard deviation of 2.7 pounds. At a significance level of 0.01, is there any
reason to doubt the validity of the claimed 10- pound value?

Evidence
Sample size 18 n
Sample
Mean 12.4 x-bar
Sample

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Stdev. 2.7 s

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 Unknown; Population Normal

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Test
Statistic 3.7712 t

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At an 
rs e of
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Null Hypothesis p-value 1%
H0:  = 10 0.0015 Reject
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Critical value t table = 2.898=> Reject Ho => The average prediction is significantly higher.
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11. A ketchup manufacturer is in the process of deciding whether to produce a new extra-spicy brand. The company’s
marketing – research department used a national telephone survey of 6,000 households and found that the extra-
spicy ketchup would be purchased by 335 of them. A much more extensive study made 2 years ago showed that 5
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percent of the households would purchase the brand then. At a 2 percent significance level, should the company
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conclude that there is an increased interest in the extra-spicy flavor?

z-Test for Population Proportion

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Large n : Both np and n(1-p) >= 5

Sample size 6000
Successes 335
Sample Proportion 0.0558
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Z stat 2.0732
Alpha
Null Hypothesis p-value 2%

H1: p  0.05 0.0191 Reject

Critical value Z tab = 2.05 hence reject Ho => There is increase in the spicy flavor.

12. Realtor Elaine Snyderman took a random sample of 12 homes in a prestigious suburb of Chicago and found the
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average appraised market value to be $780,000, with a standard deviation of $49,000. Test the hypothesis that for
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all homes in the area, the mean appraised value is $825,000, against the alternative that it is less than $825,000.
Use the 0.05 level of significance.

Sample size 12 n
Sample
Mean 780000 x-bar
Sample
Stdev. 49000 s

 Unknown; Population Normal

Test
Statistic -3.1813 t
At an 
of
Null Hypothesis p-value 5%
H0:  = 825000 0.0087 Reject
H0:   825000 0.0044 Reject

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Critical value t tab = 1.796 hence reject Ho => The value is less than 825000

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13. A metropolitan transit authority wants to determine whether there is any need for changes in the frequency of

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service over certain bus routes. The transit authority needs to know whether the frequency of service should
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increase, decrease, or remain the same. The transit authority determined that if the average number of miles
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travelled by bus over the routes in question by all residents of a given areas is about 5 per day, then no change will
be necessary. If the average number of miles travelled per person per day is either more than 5 or less than 5, then
changes in service may be necessary. The authority wants, therefore, to test the null hypothesis that the average
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number of miles travelled per person per day is 5.0 versus the alternative hypothesis that the average is not 5.0
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miles. The required level of significance for this test is α = 0.05. A random sample of 120 residents of the area is
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taken, and the sample mean is found to be 2.3 miles per resident per day and the sample standard deviation 1.5
miles. Advise the authority on what should be done. Explain your recommendation. Could you state the same
result at different levels of significance? Explain.
Evidence
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Sample
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size 120 n
Sample
Mean 2.3 x-bar
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 Known; Normal Population or Sample Size >= 30

Stdev. 1.5
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Test Statistic -19.7180 z

At an 
of
Null Hypothesis p-value 5%
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H0:  = 5 0.0000 Reject

H0:   5 0.0000 Reject
H0:  5 1.0000
Critical value Z tab = 1.96 hence reject Ho => The avg is less than 5 => they should decrease the frequency of buses.

14. A study was undertaken to determine customer satisfaction in Canadian automobile markets following certain
changes in customer service. Suppose that before the changes, the average customer satisfaction rating, on a scale
of source
This study 0 to 100, was 77.byA100000807311860
was downloaded survey questionnaire was sent
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after the changes in customer service were instituted, and the average satisfaction rating for this sample was found
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to be x = 84; the sample standard deviation was found to be s=28. Use an α of your choice, and determine whether
statistical evidence indicates a change in customer satisfaction. If you determine that a change did occur, state
whether you believe customer satisfaction has improved or deteriorated.
Evidence
Sample
size 350 n
Sample
Mean 84 x-bar

 Known; Normal Population or Sample Size >= 30

Stdev. 28
Test Statistic 4.6771 z
At an 
of
Null Hypothesis p-value 5%
H0:  = 77 0.0000 Reject
H0:   77 1.0000

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H0:  77 0.0000 Reject

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Critical value Z tab = 1.96 hence reject Ho => There is change in customer satisfaction and since the average is

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greater than previous, we can say that there is significant increase in the customer satisfaction.

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15. A study was undertaken to evaluate how stocks are affected by being listed in the Standard & Poor’s 500 Index.

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The aim of the study was to assess average excess returns for these stocks, above returns on the market as a whole.
The average excess return on any stock is zero because the “average” stock moves with the market as a whole. As
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part of the study, a random sample of 13 stocks newly included in the S&P 500 Index was selected. Before the
sampling takes place, we allow that average “excess return” for stocks newly listed in the Standard & Poor’s 500
Index may be either positive or negative; therefore, we want to test the null hypothesis that average excess return is
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equal to zero versus the alternative that it is not zero. If the excess return on the sample of 13 stocks averaged 3.1%
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and had a standard deviation of 1%, do you believe that inclusion in the Standard & Poor’s 500 Index changes a
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stock’s excess return on investment, and if so, in which direction? Explain. Use α = 0.05.

Sample size 13 n
Sample
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Mean 3.1 x-bar

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Sample
Stdev. 1 s

 Unknown; Population Normal

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Test 11.177
Statistic 2 t
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At an 
of
Null Hypothesis p-value 1%
H0:  = 0 0.0000 Reject
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Critical value t tab(5%) = 2.179 hence reject Ho => There is change in returns
The change is positive=> there is increase in the returns.

16. A large supermarket chain will increase its stock of bakery products if more than 20% of its customers are purchasers of
bakery products. A random sample of 100 customers found 28% purchased bakery items. A 5% significance test is
conducted to determine if the chain should increase its bakery stock. Formulate the hypothesis and give conclusions.
z-Test for Population Proportion

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Large n : Both np and n(1-p) >= 5

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Sample size 100
Successes 28
Sample Proportion 0.2800
Z stat 2.0000
Alpha
Null Hypothesis p-value 5%

H1: p  0.2 0.0228 Reject

Critical value Z tab = 1.645 hence reject Ho => There is increase in customer purchase proportion

17. A telephone company's records indicate that private customers pay on average Rs 170 per month for long-
distance telephone calls. A random sample of 100 out of 1500 customers' bills during a given month produced
a sample mean of 220 for long-distance calls and a variance of 200. The company wants to introduce a new
scheme for long distance call customers provided the mean level of billing for long distance calls per month is
in excess of 170 Should the company the new scheme? Test at 5% Level of significance

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Evidence
Sample

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size 100 n

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Sample

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Mean 220 x-bar

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 Known; Normal Population or Sample Size >= 30
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Correction for Finite Population
Population
Stdev. 14.1421 size 1500 N
Test Statistic 35.3553 z Test Statistic 36.5841 z
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At an 
aC s

of At an  of
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Null Hypothesis p-value 5% p-value 5%

H0:  170 0.0000 Reject 0.0000 Reject

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Critical value Z tab = 1.645 hence reject Ho => There is increase in level of billing for long distant calls.
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18. The proportion of defective items is not allowed to be over 15%. A buyer wants to test whether the proportion
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of defectives exceeds the allowable limit. The buyer takes a random sample of 100 items and finds that 19
are defective. State the null and alternative hypotheses for this test. And give conclusions At  = 0.05.
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z-Test for Population Proportion

Large n : Both np and n(1-p) >= 5

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Sample size 100

Successes 19
Sample Proportion 0.1900
Z stat 1.1202
Alpha
Null Hypothesis p-value 5%

H1: p  0.15 0.1313 cannot reject

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Critical value Z tab = 1.645 hence do not reject Ho => The defectives are within acceptable limit.
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19. Suppose that n = 100, and that we want to test whether the population mean is equal to 20 versus the
alternative that it is not equal to 20. The sample mean is found to be 18 and the sample standard deviation is
10. What should be the conclusion At  = 0.05?

Evidence
Sample
size 100 n
Sample
Mean 18 x-bar

 Known; Normal Population or Sample Size >= 30

Stdev. 10
Test Statistic -2.0000 z
At an 
of
Null Hypothesis p-value 5%

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H0:  = 20 0.0455 Reject

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Critical value Z tab = 1.96 hence reject Ho => The population mean is not equal to 20.

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