BES Tutorial Sample Solutions, S2 2010

It will be posted on BES website with one week delay.

WEEK 9 TUTORIAL EXERCISES (To be discussed in the week starting
September 20)
1. Perform the following hypothesis tests of the population mean. In each case,
illustrate the rejection regions on both the Z and X distributions, and calculate
the p-value (prob-value) of the test.
(a) H0:=50,H1:>50,n=100, =55,=10,=0.05

Rejectionregion:

50
1.645
.
10100
Alternatively

10
50
1.645
51.645
.

100

Since

55 50
5
1.645
.
10100

Canreject H 0 andconcludethatthepopulationmeanisgreaterthan 50 .

0.05

50

51.645
reject

0.05
0

1.645

Z
reject

5
(b)

H0: = 25, H1: < 25, n = 100, = 24, = 5, = 0.1

Rejectionregion:

25

24

25

5100

1.28

5100

Alternatively

Since

0.0000

25

1.28

5
100

24.36

1.28

Canreject H 0 andconcludethatthepopulationmeanislessthan 25.

0.1

X
24.36
25

reject

0.1
1.28

reject

0.0228

(c) H0: = 80, H1: 80, n = 100, = 80.5, = 4, = 0.05

Rejectionregion:

Alternatively:

80

or
.

Since

1.96

4100

80.5

80

1.96

80

1.96

80

4100

1.96

4
100
4
100

79.216
80.784

1.25

is not less than 1.96 or nor greater than 1.96 we do not reject H 0 and
concludethatthepopulationmeanisequalto80.

0.025

79.216

80

80.784

0.025

reject

reject

0.025

0.025

1.96
reject

1.96

reject

1.25

0.1056

0.2112

2. A real estate expert claims the current mean value of houses in a particular
area is more than $250,000. A random sample of 150 recent sales prices in the
area yields a sample mean of $265,000. It is known that house values in the
area are approximately normally distributed with a standard deviation of
$50,000.
(a)Perform an upper tail test of the null hypothesis that the population mean
house value in the area is $250,000. Use a 5% level of significance and
state the rejection (critical) region in terms of both and z.
Let X valueofahouseinthearea
$265,000,

$50,000, ~

Wewishtotest
:

Rejectionregion:

250,000

250,000
50,000150

or
.

Since

250,000;

265,000

250,000

250,000

50,000150

1.645

3.67

1.645

50,000

256,715.68

150

1.645

Hence we reject H 0 and conclude that the mean house value in the area is
morethan $250,000 .
(b)

Why is an upper tail test most appropriate in this case?

Thenatureoftheresearchproblemdictatesanuppertailtest.Inthiscasewe
will not believe the experts claim of unless there is significant sample
evidencetodoso.Thisimpliesanuppertailtest.
5

(c)

What is the p-value associated with the test statistic used in the part (a)
test? Interpret this value.
3.67

0.5

0.4999

0.0001

Thepvalueistheprobabilityofobtainingateststatisticmoreextremethan
therealizedvalue,assumingthenullhypothesisistrue.Thelowerthepvalue,
thegreateristheevidenceforrejectionofthenullhypothesis.Inthiscaseitis
veryunlikelytofindasamplemeanasextremeas$265,000givenapopulation
meanof$250,000.
(d)

Define the type I and II errors in the context of the part (a) test.

TypeIError:Concludingthathousingpriceismorethan$250,000,whileitis
really$250,000.

TypeIIError:Notbeingabletorejecttheclaimthathousingpriceis$250,000,
whileitisreallymore.

3. What effect does increasing the sample size have on the outcome of a
hypothesis test? Explain your answer using the example of a one-tail test
concerning the mean of a normally distributed population with known
variance. (It is expected that students will find this question difficult. Hint;
think what happens to the standard error of the mean as n increases and the
effect this has on the test statistic if the sample mean remains unchanged and
so does the true mean.)
Supposeanuppertailtest

Under

:
~

The point

on N(0,1) corresponds to the point

distributionof

0,1

on the
6

Thedistributionof

is:

0 z

Butsupposethetrue istotherightof .Thenthetruedistributionof is

say:

0 z

The shaded area in the above diagram gives the probability of correctly
rejectingH0(i.e.thepower,1whichisgreaterthan)

Nowsupposethesamplesizeisincreased.Asaresult:

decreases&hence

decreases.


Supposethenewsamplesizeisn1>n.

Thedistributionof
willnowlooksomethinglike:

0 0 z

n1

Notethatwithafixedtherejectionregioncutoffisnowsmaller.Again,ifthe
true is actually to the right of , the probability of rejecting the same
incorrect null hypothesis is higher than before. Diagrammatically the true
distributionof willbesay

X
0

0 z

n1

Againtheshadedareaintheabovediagramgivestheprobabilityofcorrectly
rejectingH0.

Conclusion:TheprobabilityofcorrectlyrejectingafalseH0.(thepowerofthe
test,asdiscussedinlecturesthisweek)increasesasnincreasesgivenwekeep
theTypeIerror()fixed.