Hypothesis testing

Test of Significance of Mean (Large Sample)

1. Many recent changes have affected the real estate market.4 A study
was undertaken to determine customer satisfaction from real estate
deals. Suppose that before the changes, the average customer
satisfaction rating, on a scale of 0 to 100, was 77. A survey
questionnaire was sent to a random sample of 50 residents who
bought new plots after the changes in the market were instituted, and
the average satisfaction rating for this sample was found to be 84; the
sample standard deviation was found to be 28. Use an alpha value of
your choice, and determine whether statistical evidence indicates a
change in customer satisfaction. If you determine that a change did
occur, state whether you believe customer satisfaction has improved
or deteriorated.
2. A certain commodity is known to have a price that is stable through
time and does not change according to any known trend. Price,
however, does change from day to day in a random fashion. If the
price is at a certain level one day, it is as likely to be at any level the
next day within some probability bounds approximately given by a
normal distribution. The mean daily price is believed to be $14.25. To
test the hypothesis that the average price is $14.25 versus the
alternative hypothesis that it is not $14.25, a random sample of 16
daily prices is collected. The results are mean is $16.50 and sample
standard deviation is$5.8. Using alpha = 0.05, can you reject the null
hypothesis?

3. Average total daily sales at a small food store are known to be

$452.80. The stores management recently implemented some
changes in displays of goods, order within aisle, and other changes,
and it now wants to know whether average sales volume has
changed. A random sample of 12 days shows mean $501.90 and sd
= $65.00. Using alpha = 0.05, is the sampling result significant?
Explain

Test of Significance of Mean (Small Sample)

4. The following data were gathered from a random sample of 11 items.
1200 1175 1080 1275 1201 1387
1090 1280 1400 1287 1225
Use these data and a 5% level of significance to test the following
hypotheses, assuming that the data come from a normally distributed population.
Null Hyp: Mean = 1160:
Alt Hyp: Mean >1160
5. The following data (in pounds), which were selected randomly from a
normally distributed population of values, represent measurements of a
machine part that is supposed to weigh, on average, 8.3 pounds.
8.1
8.4 8.3 8.2
8.5 8.6
8.4 8.3 8.4 8.2
8.8 8.2 8.2 8.3 8.1
8.3 8.4 8.5 8.5
8.7
Use these data and to test the hypothesis that the parts average 8.3 pounds.
6. Major cities around the world compete with each other in an effort to attract
new businesses. Some of the criteria that businesses use to judge cities as
potential locations for their headquarters might include the labor pool; the
environment, including work, governmental, and living; the tax structure, the
availability of skilled/educated labor, housing, education, medical care; and
others. Suppose in a study done several years ago, the city of Atlanta
received a mean rating of 3.51 (on a scale of 1 to 5 and assuming an interval
level of data) on housing, but that since that time, considerable residential
building has occurred in the Atlanta area such that city leaders feel the mean
might now be higher. They hire a team of researchers to conduct a survey of
businesses around the world to determine how businesses now rate the city
on housing (and other variables). Sixty-one businesses take part in the new
survey, with a result that Atlanta receives a mean response of 3.72 on
housing with a sample standard deviation of 0.65. Assuming that such
responses are normally distributed, use a 1% level of significance and these
data to test to determine if the mean housing rating for the city of Atlanta by
businesses has significantly increased.

Test of Significance of Proportions

7. The Independent Insurance Agents of America conducted a survey of
insurance consumers and discovered that 48% of them always reread their
insurance policies, 29% sometimes do, 16% rarely do, and 7% never do.
Suppose a large insurance company invests considerable time and money in
rewriting policies so that they will be more attractive and easy to read and
understand. After using the new policies for a year, company managers want
to determine whether rewriting the policies significantly changed the
proportion of policyholders who always reread their insurance policy. They
contact 380 of the companys insurance consumers who purchased a policy
in the past year and ask them whether they always reread their insurance
policies. One hundred and sixty-four respond that they do. Use a 1% level of
significance to test the hypothesis.
8. A study by Hewitt Associates showed that 79% of companies offer
employees flexible scheduling. Suppose a researcher believes that in
accounting firms this figure is lower. The researcher randomly selects 415
accounting firms and through interviews determines that 303 of these firms
have flexible scheduling. With a 1% level of significance, does the test show
enough evidence to conclude that a significantly lower proportion of
accounting firms offer employees flexible scheduling?