Chapter 07 - Hypothesis Testing

STUDENT SOLUTION MANUAL

Business Statistics in Practice, Third Canadian Edition
by
Bowerman, Aitken Schermer, Johnson, & O’Connell

CHAPTER 7
Hypothesis Testing

7.3 [LO1, LO2]

a. H 0 : µ ≤ 42 versus H a : µ > 42.

b. Type I: decide the mean is > 42 (customers satisfied) when it is really ≤ 42

Type II: decide the mean is ≤ 42 (customers not satisfied) when it is really > 42

7.5 [LO1, LO2]

a. H 0 : µ = 3 versus H a : µ ≠ 3, where µ = mean diameter.

b. Type I: decide µ ≠ 3 (assign team) when µ = 3 (team is not needed)

Type II: decide µ = 3 (do not assign team) when µ ≠ 3 (team may be needed)

7.7 [LO1, LO2]

a. H 0 : µ ≤ 15 versus H a : µ > 15 where µ = mean temperature of waste water.

b. Type I: decide µ > 15 (shut down) when µ ≤ 15 (water is cool enough, no shutdown
needed)
Type II: decide µ ≤ 15 (do not shut down) when µ > 15 (water is too warm, shutdown
needed)

c. Set α = .05 to make the probability of a Type II error smaller.

7.11 [LO3]

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Chapter 07 - Hypothesis Testing

18 − 20
a. z= = −2
7
49

b.

Since –2 > –2.33, Do not reject H 0 with α =.01.

c. z = –2. p-value = P(z < -2) = .0228

d. Since .0228 is less than .10 and .05, but not less than .01 and 001, reject H 0 at α = .10
and .05, but not at α = .01 or .001.

e. Since p-value = .0228 is less than .05, there is strong evidence against H 0 .

7.13 [LO1, LO3]

a. H 0 : µ ≤ 42 versus H a : µ > 42

b.

Reject Points
z.10 = 1.28
z.05 = 1.645
z.01 = 2.33
z.001 = 3.09

Since 1.28<1.645<2.33<2.91<3.09, reject H 0 with α =.10, .05, .01, but not with .001.

c. p-value = 1 − .9982 = .0018

Since p-value=.0018 is less than .10, .05, and .01, reject H 0 at those levels of α, but not
with α =.001.

d. Since p-value = .0018 is less than .01, there is very strong evidence against H 0 .

7.15 [LO1, LO3]

a. H 0 : µ ≤ 15 versus H a : µ > 15.

b.

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Chapter 07 - Hypothesis Testing

Since 2.41 > 1.645 we reject H 0 for α = 0.05. p-value = 1 – 0.9920 = 0.0080 and since
0.0080 < 0.05 we draw the same conclusion so the plant should be shut down and the
cooling system repaired.

7.17 [LO3]

reject point = 1.645, p-value = 1 – 0.9990 = 0.001 so we reject H 0 and we conclude the plant
should be shut down and the cooling system repaired.

7.19 [LO1, LO3]

a. H 0 : µ = 500 versus H a : µ ≠ 500.

b. For α = .01, zα / 2 =z .005 = 2.576

When x = 501.56, z = 3.00, reject H 0 ; readjust.

p-value = 2(1 – .9987) = .0026<.01, reject H 0 , readjust.

When x = 498.75, z = –2.40, do not reject H 0 : do not readjust.

p-value = 2(1 – .9918) = .0164, not less than .01, do not reject H 0 , do not readjust.

When x = 500.63, z = 1.21, do not reject H 0 ; do not readjust.

p-value=2(1 – .8849) = .2302, not less than .01, do not reject H 0 , do not readjust.

When x = 498.125, z = -3.61, reject H 0 ; readjust.

p-value is approximately 0.0003 < .001 reject H 0 , readjust.

7.23 [LO1, LO4]

H 0 : p = .3 versus H a : p ≠ .3.

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Business Statistics in Practice, Third Canadian Edition
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Chapter 07 - Hypothesis Testing

.2 −.3
z= = −2.18
a. .3(.7)
100
− z .01 / 2 = − z .005 = −2.575
Since –2.575 < –2.18, do not reject H 0 .

b. p-value = 2P(z > 2.18) = .0292

c. Reject H 0 at α = .10 and .05, but not at α = .01 or .001.

7.25 [LO1, LO4]

a. H 0 : p ≤ .25 versus H a : p > .25.

146
b. pˆ = = .365
400

z.001 = 3.09
Since 5.31 > 3.09, reject H 0 at α = .10, .05, .01, .001; extremely strong evidence.

c. p-value = P(z > 5.31) = 0.0000 is less than .001; reject H 0 at all given values of α.

d. Probably, .365 is significantly higher than .25 in terms of shares.

7.27 [LO1, LO4]

H0: p = 0.5 Ha: p < 0.5

p-value = P(z < -3.81) = 0.00007

Since -3.81 < -3.090 or since 0.00007 < 0.001, there is extremely strong evidence that p < 0.5.

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Chapter 07 - Hypothesis Testing

7.29 [LO1, LO4]

a. H 0 : p = .95 versus H a : p < .95.

316
b. pˆ = = .79
400
.79 −.95
z= = −14.68
.95(.05)
400
Reject H 0 at each value of α; extremely strong evidence.

c. Probably, pˆ = .79 is far below the claimed .95.

7.33 [LO5]

5−0
a. z= = 10 and z.05 = 1.645
.5
Reject H 0 at α = .05 . Conclude µ1 > µ 2 .

5−4
b. z= = 2 and z.05 = 1.645
.5
p-value = P(z > 2) = .0228
Reject H 0 at α =.10, .05 , but not at α = .01 or .001.

7.35 [LO1, LO5]

a. H 0 : there is no difference in the mean audit delay for the two types of companies
H a : the mean audit delay for public owner-controlled companies is less than that for
manager-controlled companies.

− 10.4 − 0
b. z= = −2.0967 and − z.05 = −1.645
4.96
Reject H 0 ; conclude µ 1 < µ 2 .

c. p-value = P(z < –2.1) = .0179

Reject H 0 at α = .10 and .05, but not at α = .01 or .001. There is strong evidence that
µ1 < µ 2 .

7.37 [LO1, LO5]

a. H 0 : µ1 − µ 2 ≤ 0 versus H a : µ1 − µ 2 > 0 .

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Chapter 07 - Hypothesis Testing

.13 − 0
b. z= = 1.41 and z.05 = 1.645
.092
Do not reject H 0 at α = .05. Cannot conclude µ1 > µ 2 .

7.39 [LO1, LO5]

a. H 0 : µ1 − µ 2 = 0 versus H a : µ1 − µ 2 ≠ 0 .

8.2 − 7.3
b. z= = 5.06
(1.6) 2 (1.4) 2
+
125 175
z .025 = 1.96
Since 5.06 > 1.96, reject H 0 at α = .05. Conclude µ1 and µ 2 differ.

c. p-value = 2P(z > 5.06) is less than .001. Reject H 0 at each of the given values of α ;
extremely strong evidence.

7.43 [LO1, LO6]

H 0 : p1 − p2 ≥ −.12 versus H a : p1 − p2 < −.12 .

p-value = P(z < –2.08) = .5 – .4812 = .0188 < α = .05

Reject H 0 at α = .10, .05, but not at α = .01 or .001; strong evidence.

7.45 [LO1, LO6]

a. H 0 : p1 − p2 = 0 versus H a : p1 − p2 ≠ 0

25 9 25 + 9
b. pˆ1 = = .179, pˆ 2 = = .15, pˆ = = .17
140 60 140 + 60
 1 1 
s pˆ 1 − pˆ 2 = (.17)(.83) +  = .058
 140 60 
.179 − .15
z= = .50
.058
p-value = 2P(z > .5) = 2(.5 – .1915) = .617 > α = .10
Do not reject H 0 at any of the α-values; little or no evidence that p1 and p2 differ.

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Chapter 07 - Hypothesis Testing

7.47 [LO6]

(a)

Canada is more positive about the economy than either the US or Britain. Canada and
Australia are equally positive about their respective economies.

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Chapter 07 - Hypothesis Testing

(b)

All three countries are significantly more optimistic about the future than would seem to be
warranted by their enthusiasm for their economy…

7.53 [LO1, LO7]

a. H 0 : µ ≤ 15 versus Ha : µ > 15.

n = 100, σ = 2, α = .025

µ = 15.1

μ β

15.2 .8315

15.3 .6772

15.4 .4840

15.5 .2946

15.6 .1492

15.7 .0618

15.8 .0207

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Chapter 07 - Hypothesis Testing

15.9 .0055

16.0 .0012

b. No, β = .2946 when µ = 15.5. Increase the sample size.

c. Plot is not included in this manual; power increase.

7.55 [LO1, LO7]

H 0 : µ ≤ 15 versus H a : µ ≥ 15, µ 0 = 15
α = .025 and β = .025 for µ a = 15.5.
z* = zα = z.025 = 1.96
z β = z.025 = 1.96

7.61 [LO8]

The effect size is actually a medium-sized effect, suggesting that, all things being equal, the
effect would have been demonstrated to be statistically significant, had you had enough
individuals within your division.

7.63 [LO8]

; small to medium effect (possibly important)

7.65 [LO1, LO4]

a. H 0 : p ≥ .05 versus H a : p < .05.

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Chapter 07 - Hypothesis Testing

18
b. pˆ = = .0288
625
.0288 − .05
z= = −2.43
(.05)(.95)
625
− z.01 = −2.33,− z.001 = −3.09
Since –3.09 < –2.43 ≤ –2.33, reject H 0 at α = .10, .05, .01, but not at α = .001;
very strong evidence.

c. p-value = P(z < –2.43) = .0075

Reject H 0 at α = .10, .05, .01, but not at α = .001.

d. Probably

7.67 [LO3]

a. Since p-value = .0139, we reject H 0 for α = .1 and .05, but not at α = .01 and .001.

b. Strong evidence.

7.69 [LO1, LO4]

a. H 0 : p ≤ .60, H a : p > .60

.64 − .60
b. z= = 2.58
(.6)(.4)
1000
z.01 = 2.33, z.001 = 3.09

Since 2.33 < 2.58 < 3.09, Reject H 0 at α = .10, .05, .01, but not at .001, very strong evidence

7.71 [LO6]

a.

Wife entitled to half the assets.

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Chapter 07 - Hypothesis Testing

Reject at .01, but not at .001. Strong evidence exists.

Pension split evenly.

Reject at all α.

Stock options split evenly.

Reject at all α.

Managing the household.

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Chapter 07 - Hypothesis Testing

Reject at all α.

Corporate wife that travels.

Reject at all α.

Lifestyle of corporate wife.

Reject at all α.

b. Answers will vary.

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