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Test of Hypothesis Concerning the Population Mean

Again, we must distinguish two cases with respect to the size of your sample Large Sample Size (say, over 30): In this section you wish to know how Excel can be used to conduct a hypothesis test about a population mean. We will use the hourly incomes of different work-study students than those introduced earlier in the confidence interval section. Data are entered in cells A1 to A36. The objective is to test the following Null and Alternative hypothesis:

The null hypothesis indicates that the average hourly income of a work-study student is equal to $7 per hour; however, the alternative hypothesis indicates that the average hourly income is not equal to $7 per hour. I will repeat the steps taken in descriptive statistics and at the very end will show how to find the value of the test statistics in this case, z, using a cell formula. Step 1. Enter data in cells A1 to A36 (on the spreadsheet) Step 2. From the menus select Tools Step 3. Click on Data Analysis then choose the Descriptive Statistics option, click OK. On the descriptive statistics dialog, click on Summary Statistic. Select the Output Range box, enter B1 or whichever location you desire. Now click OK. (To calculate the value of the test statistics search for the mean of the sample then the standard error. In this output, these values are in cells C3 and C4.) Step 4. Select cell D1 and enter the cell formula = (C3 - 7)/C4. The screen shot should look like the following:

The value in cell D1 is the value of the test statistics. Since this value falls in acceptance range of -1.96 to 1.96 (from the normal distribution table), we fail to reject the null hypothesis. Small Sample Size (say, less than 30): Using steps taken the large sample size case, Excel can be used to conduct a hypothesis for small-sample case. Let's use the hourly income of 10 work-study students at UB to conduct the following hypothesis.

The null hypothesis indicates that average hourly income of a work-study student is equal to $7 per hour .The alternative hypothesis indicates that average hourly income is not equal to $7 per hour.

I will repeat the steps taken in descriptive statistics and at the very end will show how to find the value of the test statistics in this case "t" using a cell formula.

Step 1. Enter data in cells A1 to A10 (on the spreadsheet)

Step 2. From the menus select Tools

Step 3. Click on Data Analysis then choose the Descriptive Statistics option. Click OK. On the descriptive statistics dialog, click on Summary Statistic. Select the Output Range boxes, enter B1 or whatever location you chose. Again, click on OK. (To calculate the value of the test statistics search for the mean of the sample then the standard error, in this output these values are in cells C3 and C4.)

Step 4. Select cell D1 and enter the cell formula = (C3 - 7)/C4. The screen shot would look like the following:

Since the value of test statistic t = -0.66896 falls in acceptance range -2.262 to +2.262 (from t table, where = 0.025 and the degrees of freedom is 9), we fail to reject the null hypothesis.