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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)
Rejectionregion:
25
24
25
5100
1.28
5100
Alternatively
Since
0.0000
25
1.28
5
100
24.36
1.28
0.1
X
24.36
25
reject
0.1
1.28
reject
0.0228
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)
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
distributionof
0,1
on the
6
Thedistributionof
is:
0 z
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.