2340.Notes.Chapter 9 - OIS 2340 Business Statistics Estimating Population Parameters Hypothesis Tests Goal Find statistical evidence to support or

# 2340.Notes.Chapter 9 - OIS 2340 Business Statistics...

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OIS 2340 Business Statistics Estimating Population Parameters 1 Hypothesis Tests Goal: Find statistical evidence to support or refute a claim. The Hypotheses 1. Null Hypothesis a. Includes the “status quo” or the assumed state of affairs. b. Includes the equality in the claim. (i.e. > or < or =) c. Denoted as H 0 d. Is either “rejected” or “not rejected” based on the statistical analysis. 2. Alternative Hypothesis a. Encompasses the rest of the sample space not included in the null. b. Does not include equality. (i.e. > or <) c. Denoted as H A d. Often called a “research hypothesis” or an “assumption” that we are challenging. Types of Hypothesis Tests 1. One-Tail Test a. Upper Tail Test Example: Suppose someone claims that the average GPA of a student at the University of Utah is above 3.0. H 0 : H A : This is an upper tail test because we will reject the null hypothesis if enough of our sample data falls ABOVE 3.0, or in the upper tail of the normal curve.
OIS 2340 Business Statistics Estimating Population Parameters 2 b. Lower Tail Test Example: Suppose someone claims that fewer than 40% of the population favors candidate A for election. H 0 : H A : This is a lower tail test because we will reject the null hypothesis if enough of our sample data falls BELOW 0.40, or in the lower tail of the normal curve. 2. Two-Tail Test (similar to confidence intervals) Example: We want to test whether a particular fuel injection unit will provide 24 miles per gallon. H 0 : H A : This is a two tail test because we will reject the null hypothesis if enough of our sample data falls ABOVE or BELOW 24, or in either tail of the normal curve.
OIS 2340 Business Statistics Estimating Population Parameters 3 Formulating Hypotheses and Determining Test Type Formulating Hypothesis and Determining Test Type It is claimed that the mean salary of college-educated women in Utah is greater than the national average for all college-educated women, which is known to be \$45,000. A random sample of 100 college-educated women in Utah is taken. Their average salary is determined to be \$46,500 with a standard deviation of \$5,200.

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• Fall '11
• Statistics, Statistical hypothesis testing, Type I and type II errors