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# Problems in hypothesis testing

1.
A manufacturer for a new motorcycle claims for it an average mileage of 60 km per litre
with a standard deviation of 2 km under city conditions. However, the average mileage in
64 trials is found to be 57 km. Is the manufacturer’s claim justified?

2.
An owner of the press claims that the life of its largest web press is 14,500 hours with a
standard deviation of 2,100 hours. From a sample of 25 presses, the company finds a
sample mean of 13,000 hours. Do you think that the average life of the presses is
different from 14,500 hours as claimed by the company? Verify it at 0.01 level of
significance.

3.
A radio shop sells, on an average, 200 radios per day with a standard deviation of 50
radios. After an extensive advertising campaign, the management will compute the
average sales for the next 25 days to see whether an improvement has occurred. Assume
that the daily sales of radios are normally distributed.
I. Write down the null and alternative hypotheses
II. Test the hypothesis at 5 percent level of significance if xbar = 216.
III. How large must xbar be in order that the null hypothesis is rejected at 5 percent
level of significance?
4.
An aircraft manufacturer needs to buy aluminium sheets of 0.05 inch in thickness.
Thinner sheets would not be appropriate and thicker sheets would be too heavy. The
aircraft manufacturer takes a random sample of 100 sheets and finds that their average
thickness is 0.048 inch and their standard deviation is 0.01 inch. Should the aircraft
manufacturer buy the aluminium sheets from his supplier if he wants to make the
decision at

## (ii) 1 percent level of significance?

5.

An advertising company feels that 20 percent of the population in the age group of 18 to
25 years in a town watch a specific serial. To test this assumption, a random sample of
2,000 individuals in the same age group was taken of which 440 watched the serial. At 5
percent level of significance, can we accept the assumption laid down by the company.

6.
The credit manager of a department store chain believes that the average age of charge
account customers is less than 30 years. A random sample of 100 charge account
customers reveals a mean age of 27 years and a standard deviation of 10 years. Do these
data provide sufficient evidence to support the credit manager’s belief? Let level of
significance be α = 0.05.

7.
A stock-broker claims that she can predict with 85 percent accuracy whether a stock’s
market value will rise or fall during the coming month. As a test, she predicts the
outcome of 60 stocks and is correct in 45 of the predictions. Do these data support the
stock-broker’s claim?

8.
An insurance agent has claimed that the average age of policyholders who insure through
him is less than the average for all agents, which is 30.5 years.
A random sample of 100 policyholders who had insured through him gave the following
age distribution.

## Age Last Birthday

No. of Persons Insured
(Years)

16—20 12
21—25 22
26—30 20
31—35 30
36—40 16
Total 100
Test his claim at the 5 percent level of significance.

9.
A random sample of boots worn by 36 soldiers in a desert region shows an average life of
1.08 years with the standard deviation of 0.6 years. Under the standard condition, the
boots are known to have an average life of 1.28 years. Is there a reason to assert at 1
percent level of significance that use in desert causes the mean life of such boots to
decrease? What will be your conclusion if the level of significance is 5 percent? Assume
that the life of boots is normally distributed.

10.
Two types of batteries are tested for their length of life and the following data are
obtained:

Sample Mean
Variance (hour)
Size Life

## Is there a significant difference in. the two means?

11.
You are given the following data about the life of two brands of bulbs:

## Is there a significant difference in the mean life of two brands?

12.

Two types of scooters produced in India are tested for mileage. One group consisting of
36 scooters averaged 24 km per litre of petrol, while the other group consisting of 72
scooters averaged 22.5 km per litre of petrol.

(i) What test statistic is appropriate if σ12 = 1.5 and σ22 = 2.0?
(ii) Test, whether statistically there exists a significant difference in the petrol
consumption of these two types of scooters. (Use α = 0.01.)

13.
The cinema-goers were 800 people out of a sample of 1,000 persons during the period of
a fortnight in a town where no TV programme was available. The cinema-goers were 700
people out of a sample of 2,800 persons during a fortnight in another town where TV
programme was available. Do you think that there has been a significant decrease in
proportion of cinema-goers after introducing TV sets? Test the hypothesis that there is no
difference in proportion of cinema-goers. Use a level of significance of 0.01.

14.
A random sample of 100 mill-workers at Kanpur showed their mean wage to be Rs 3,500
with a standard deviation of Rs 280. Another random sample of 150 mill-workers in
Mumbai showed the mean wage to be Rs 3,900 with a standard deviation of Rs 400. Do
the mean wages of workers in Mumbai and Kanpur differ significantly? Use 0.05 level of
significance.

15.
A man buys 50 electric bulbs of ‘Philips’ make and another 50 of the ‘GE’ make. He
finds that the Philips bulbs give an average life of 1,500 hours with a standard deviation
of 60 hours and the GE bulbs give an average of 1,512 hours with a standard deviation of
80 hours. Is there a significant difference between the two makes?

16. Two salesmen A and B are working in a certain district. From a sample survey
conducted by the head office, the following results were obtained. State whether there is
any significant difference in the average sales between the two salesmen.
A B
No.of Sales 20 15

## Avg. sales (in Rs) 170 200

Standard deviation 20 25
(in Rs.)

17.

Ten persons were appointed in officer cadre in an office. Their performance was
evaluated by giving a test and the marks were recorded out of 100. They were given two
months’ training and another test was held and marks were recorded out of 100.

## Employees Before Training After Training

A 80 84

B 76 70

C 92 96

D 60 80

E 70 70

F 56 52

G 74 84

H 56 72

I 70 72

J 56 50

By applying the t-test, can it be concluded that the employees have benefited by the
training? Use 5 percent level of significance.

18.
Samples of two different types of bulbs were tested for length of life, and the following
data were obtained:
Sample Size Sample Mean Sample S.D.

## Is the difference in means significant?

19.
500 units from a factory are inspected and 12 are found to be defective. 800 units from
another factory are inspected and 12 are found to be defective. Can it be concluded at 5
percent level of / significance that production at the second factory is better than in the
first factory?

20.
Judge the correctness of the following:
To test H0 : σ = σ0 (given); H1 : σ < σ0, given that μ is known and sample size is 10, the
relevant test statistic follows a t-distribution with degrees of freedom as 10 and the value
under H0 turns out to be -3.06.

21.
Judge the correctness of the following:
Given that μ and σ are both unknown for testing the hypotheses H0 : μ = μ 0 (given), H1 :
μ> μ 0 with the sample size as 15, the value of the test statistic under H 0 should be
between 3.5 and 7.2 so as to reject H0 at 5 percent level of significance and to accept H0at
1 percent level of significance.

22.
In a study of advertising effectiveness, a sample of 50 housewives rated a new bleach
product when it first appeared. After a month of intensive television advertising, the same
women were asked to try the product again. Using a Scoring system based on perceptions
of product effectiveness, the difference in scores given to the product had mean 1.6 and
standard deviation 2.0. Is there evidence that perceptions of the product’s effectiveness
changed during the period of the advertisement? Carry out the test at 0.05 level of
significance.
23.
A large corporation finds that 63 percent of the 150 sales people who have never had a
self-improvement course would like such a course. The firm had done a similar study 10
years ago.

Then, only 58 percent of 160 sales people wanted a self-improvement course. At the 0.05
level of significance, test the null hypothesis that sales people are no more eager for self-
improvement course this year than they were 10 years ago. The groups are assumed to
constitute two independent simple random samples.

24.
Wansley, Rosenfeldt, and Cooley (1983) compared the profiles of a sample of 44 firms
that merged during 1975-76 with those of a sample of 44 firms that did not merge. The
table displays information obtained on the firm’s Price-earning ratios.

## Sample S.D. 7.374 16.089

(i) The analysis performed by Wensley, Rosenfeldt, and Cooley indicated that
“merged firms generally have smaller price-earning ratios”. Do you agree? Test
using α = 0.05.
(ii) Report the p-value of the test you conducted in part (i).
(iii) What assumption(s) was necessary to make in order to perform the test in part
(i)?
(iv) Do you think that the distribution of the price-earning ratios for the population
from which these samples were drawn are normally distributed? Why or why
not?
25.
One way by which corporations raise money for expansion is to issue bonds, which are
loan agreements to repay the purchaser a specified amount of money with a fixed rate of
interest paid periodically over the life of the bond. The sale of the bonds is usually
handled by a underwriting firm. In a study described in the Harvard Business Review
(July—August 1979), D. Logue and R. Rogalski ask the question, “Does it pay to shop
for your bond underwriter?” The reason for the question is that the price of a bond may
rise or fall after its issuance. Therefore, whether a corporation receives the market price
for a bond depends on the skill of the underwriter. The mean change in the price of 27
bonds over a 12-month period by one underwriter and in the prices of 23 bonds handled
by another are given in the table

Underwriter I Underwriter II

Sample Size 27 23

## Sample 0.009800 0.002465

Vairance

Do the data provide sufficient evidence to indicate a difference in the mean change in
bond prices handled by the two underwriters? Test at α = 0.05.

26.

Find the probability of committing a Type II error for the following test of hypothesis,
given that µ = 196: H0 : µ = 200 ; H0 : µ < 200; The significance level is 10%, the
population standard deviation is 30 and the sample size is 25.

## Repeat the above for n = 100. Comment on the result.

27.

A statistics practitioner wants to test the following hypotheses with σ = 20 and n =100.

H0 : µ = 100 ; H1 : µ > 100 ; Find the chances of a Type II error if µ is 102 and α is 0.1.

Repeat the above for a significance level of .02. Comment on the result.