COMPLETE

BUSINESS
STATISTICS
by
AMIR D. ACZEL
&
JAYAVEL SOUNDERPANDIAN
7th edition.

Prepared by Lloyd Jaisingh, Morehead State

University

Chapter 10
The Comparison of Two Populations

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
 8-2

10 The Comparison of Two Populations

• Using Statistics
• Paired-Observation Comparisons
• A Test for the Difference between Two Population Means Using
Independent Random Samples
• A Large-Sample Test for the Difference between Two Population
Proportions
• The F Distribution and a Test for the Equality of Two Population
Variances
 8-3

10 LEARNING OBJECTIVES
After studying this chapter you should be able to:
• Explain the need to compare two population parameters
• Conduct a paired-difference test for the difference in population means
• Conduct an independent-samples test for the difference in population means
• Describe why a paired-difference test is better than independent-samples test
• Conduct a test for difference in population proportions
• Test whether two population variances are equal
• Use templates to carry out all tests
 8-4

8-1 Using Statistics

• Inferences about differences between parameters of two

populations
 Paired-Observations
 Observe the same group of persons or things
 At two different times: “before” and “after”
 Under two different sets of circumstances or “treatments”
 Independent Samples
 Observe different groups of persons or things
 At different times or under different sets of circumstances
 8-6

8-2 Paired-Observation Comparisons

• Population parameters may differ at two different

times or under two different sets of circumstances
or treatments because:
 The circumstances differ between times or treatments
 The people or things in the different groups are themselves different
• By looking at paired-observations, we are able to
minimize the “between group” , extraneous
variation.
 8-15

8-3 A Test for the Difference between Two Population

Means Using Independent Random Samples

• When paired data cannot be obtained, use independent

random samples drawn at different times or under different
circumstances.
 Large sample test if:
 Both n130 and n230 (Central Limit Theorem), or
 Both populations are normal and 1 and 2 are both known
 Small sample test if:
 Both populations are normal and 1 and 2 are unknown
 8-16

Comparisons of Two Population

Means: Testing Situations
• I: Difference between two population means is 0
 1= 2
 H0: 1 -2 = 0
 H1: 1 -2  0
• II: Difference between two population means is less than 0
 12
 H0: 1 -2  0
 H1: 1 -2  0
• III: Difference between two population means is less than D
 1  2+D
 H0: 1 -2  D
 H1: 1 -2  D
 8-17

Comparisons of Two Population

Means: Testing Situations
• IV: Difference between two population means is greater than 0
 12
 H0: 1 -2  0
 H1: 1 -2 0
• V: Difference between two population means is greater than D
 1  2+ D
 H0: 1 -2  D
 H1: 1 -2  D
H0: μ1- μ2 ≤ 45
H1: μ1- μ2 > 45
Confident interval
Confident interval
Confident interval
 8-38

8-4 A Large-Sample Test for the Difference

between Two Population Proportions

• Hypothesized difference is zero

 I: Difference between two population proportions is 0
• p1= p2
» H0: p1 -p2 = 0
» H1: p1 -p20
 II: Difference between two population proportions is less than 0
• p1p2
» H0: p1 -p2  0
» H1: p1 -p2 > 0
• Hypothesized difference is other than zero:
 III: Difference between two population proportions is less than D
• p1 p2+D
» H0:p-p2  D
» H1: p1 -p2 > D
 8-39

8-4 A Large-Sample Test for the Difference

between Two Population Proportions

• Hypothesized difference is zero

 IV: Difference between two population proportions is greater than 0
• p1p2
» H0: p1 -p2  0
» H1: p1 -p2 < 0
• Hypothesized difference is other than zero:
 V: Difference between two population proportions is greater than D
• p1 p2+D
» H0:p-p2  D
» H1: p1 -p2 < D
H0: p2 - p1 < 0.05
H1: p2 – p1≥ 0.05
Thus, at 0.05 level of significance, we can reject H0, since F-test > Fc ( R ) It means that based on

the hypothesis testing we have sufficient evidence to prove that the variance of the number of cars

sold per month before the announcement is different from the variance of the number of cars sold

per month after the announcement.

 8-50

The F Distribution

•• The
TheFFrandom
randomvariable
variablecannot
cannot F Distributions with different Degrees of Freedom
benegative,
be negative,so soititisisbound
boundbyby
zeroon
zero onthe
theleft.
left. 1.0 F(25,30)

f(F)
•• The
TheFFdistribution
distributionisisskewed
skewedtoto F(10,15)

theright.
the right. 0.5

•• The
TheFFdistribution
distributionisisidentified
identified
thenumber
the numberof ofdegrees
degreesof of 0.0
F(5,6)

freedomin
freedom inthe
thenumerator,
numerator,kk,1, 0 1 2 3 4 5
F
1
andthe
and thenumber
numberof ofdegrees
degreesofof
freedomin
freedom inthe
thedenominator,
denominator,
kk2.2.
 8-51

Using the Table of the F Distribution

Critical Points of the F Distribution Cutting Off a F Distribution with 7 and 11 Degrees of Freedom
Right-Tail Area of 0.05

k1 1 2 3 4 5 6 7 8 9 0.7

0.6
k2
1 161.4 199.5 215.7 224.6 230.2 234.0 236.8 238.9 240.5 0.5
2 18.51 19.00 19.16 19.25 19.30 19.33 19.35 19.37 19.38 0.4

f(F)
3 10.13 9.55 9.28 9.12 9.01 8.94 8.89 8.85 8.81
4 7.71 6.94 6.59 6.39 6.26 6.16 6.09 6.04 6.00 0.3
5 6.61 5.79 5.41 5.19 5.05 4.95 4.88 4.82 4.77 0.2
6 5.99 5.14 4.76 4.53 4.39 4.28 4.21 4.15 4.10
7 5.59 4.74 4.35 4.12 3.97 3.87 3.79 3.73 3.68 0.1
8 5.32 4.46 4.07 3.84 3.69 3.58 3.50 3.44 3.39 0.0 F
9 5.12 4.26 3.86 3.63 3.48 3.37 3.29 3.23 3.18 0 1 2 3 4 5
10 4.96 4.10 3.71 3.48 3.33 3.22 3.14 3.07 3.02
11 4.84 3.98 3.59 3.36 3.20 3.09 3.01 3.01 2.95 2.90
12 4.75 3.89 3.49 3.26 3.11 3.00 2.91 2.85 2.80 F0.05=3.01
13 4.67 3.81 3.41 3.18 3.03 2.92 2.83 2.77 2.71
14 4.60 3.74 3.34 3.11 2.96 2.85 2.76 2.70 2.65
15 4.54 3.68 3.29 3.06 2.90 2.79 2.71 2.64 2.59

The left-hand critical point to go along with F(k1,k2) is given by: 1

F k 2 ,k 1
Where F(k1,k2) is the right-hand critical point for an F random variable with the reverse
number of degrees of freedom.
 8-52

Critical Points of the F Distribution:

F(6, 9),  = 0.10

F Distribution with 6 and 9 Degrees of Freedom Theright-hand

The right-handcritical
criticalpoint
pointread
read
directlyfrom
directly fromthethetable
tableofofthe
theFF
0.7
distributionis:
distribution is:
0.05
0.6 0.90
0.5

0.4
FF(6,9) =3.37
(6,9)=3.37
f(F)

0.3
0.05
0.2

0.1 Thecorresponding
The correspondingleft-hand
left-handcritical
critical
0.0 pointisisgiven
point givenby:
by:
0 1 2 3 4 5 F
1 1
F0.95=(1/4.10)=0.2439 F0.05=3.37
  0.2439
F 9 , 6 410
.
 8-53

Test Statistic for the Equality of Two

Population Variances
Teststatistic
Test statisticfor
forthe
theequality
equalityof
ofthe
thevariances
variancesof
oftwo
twonormally
normally
distributedpopulations:
distributed populations:
2
s
s1 2

FF n n1,1n,n11  s122

s2
1 2
1 2

I:I:Two-Tailed
Two-TailedTestTest



• • 1 1==2 2
•
•
HH0:0:1 1==2 2
•
•
HH1:
1:2
 2

 II:One-Tailed
II: One-TailedTestTest
•
•
1
12
2
H0:0:1 1
•• H 2 2
•
•
HH1:1:1 1
2 2
 8-54

Example 8-9
The economist wants to test whether or not the event (interceptions and prosecution of insider
traders) has decreased the variance of prices of stocks.

Population 1 : Before
n = 25 2
1 2 2
H 0:  
s 2  9 .3 1 21
1
2 2
Population 2 : After H1:  
n = 24 1 2
2
s2
s 2  3 .0 1 9.3
F  F    3.1
2
n1  1, n 2  1 
24,23 s2  3.0
2
  0.05
F  2.01
 24,23 H 0 may be rejected at a 1% level of significance.
  0.01
F  2.70
 24,23
 8-55

Example 8-9: Solution

Distribution with 24 and 23 Degrees of Freedom Sincethe

Since thevalue
valueofofthe
thetest
test
0.7

0.6
statisticisisabove
statistic abovethethecritical
critical
0.5 point,even
point, evenforforaalevel
levelof
of
0.4
significanceas
significance assmall
smallasas0.01,
0.01,
f(F)

0.3

0.2 thenull
the nullhypothesis
hypothesismay maybebe
0.1
rejected,and
rejected, andwewemaymay
0.0 F
0 1 2 3 4 5 concludethat
conclude thatthe
thevariance
varianceofof
F0.01=2.7 Test Statistic=3.1 stockprices
stock pricesisisreduced
reducedafter
after
theinterception
the interceptionand and
prosecutionof
prosecution ofinside
insidetraders.
traders.
 8-56

Example 8-9: Solution Using the

Template

Decision: Reject the null hypothesis; p-value = 0.0042.

 8-57

Example 8-10: Testing the Equality of

Variances for Example 8-5

Population 1 Population 2
n = 14 n =9 2
H :  
2
1 2 0 1 2
2 2 2 2
s  0.12 s  0.11 2 2
1 2 H :  
1 1 2
  0.05
s2
F  3.28 1 0.12 2
F F    119
.
 13,8  n1  1, n2  1  13,8 s 0.11
2 2
2
  0.10
F  2.50 H may not be rejected at the 10% level of significance.
 13,8 0
 8-58

Example 8-10: Solution

F Distribution with 13 and 8 Degrees of Freedom

Sincethe
Since thevalue
valueof ofthe
thetest
test
statisticisisbetween
betweenthe thecritical
critical
0.7

0.10
0.6 0.80 statistic
0.5

0.4
points,even
points, evenfor foraa20%
20%level
levelof
of
f(F)

0.3
0.10 significance,we
significance, wecan
cannot
notreject
reject
0.2

0.1 thenull
the nullhypothesis.
hypothesis. We We
0.0
0 1 2 3 4 5 F concludethe
conclude thetwo
twopopulation
population
F0.90=(1/2.20)=0.4545 F0.10=3.28
variancesare
variances areequal.
equal.
Test Statistic=1.19
 8-59

Template to test for the Difference between Two

Population Variances: Example 8-10

Decision: Do not reject the null hypothesis; p-value = 0.8304;

Assume equal variances..
 8-60

Example 8-10: Using Minitab to Test for

Equal Variances
Confidence intervals overlap with
sample estimates in both – assume
Equal variances.

Test for Equal Variances

Test for Equal Variances
F-Test
F-Test
Test Statistic 1.19
Test Statistic 1.19
P-Value 0.830
P-Value 0.830
1
1

Decision: Do not reject

the null hypothesis;
p-value = 0.830;
2
Assume equal variances. 2

0.05 0.10 0.15 0.20 0.25

0.05 0.10 0.15 0.20 0.25
95% Bonferroni Confidence Intervals for StDevs
95% Bonferroni Confidence Intervals for StDevs
 8-61

The F Distribution Template

 8-62

The Template for Testing Equality of

Variances with data

Do not reject the

Null hypothesis for
Equality of variances
Since P-value = 0.6882
 8-63

Using Minitab to test for the Equality of

Variances with data

Donot
Do notreject
rejectthe
the
nullhypothesis
null hypothesisforfor
equalityofofvariances
equality variances
sinceP-values
since P-valuesare are
largefor
large forboth
boththe
the
F-testand
F-test andLevine’s
Levine’stest.
test.
 8-64

Using Minitab to test for the Equality of

Variances with data
Testfor
Test forEqual
EqualVariances
Variancesfor
forData
Data
F-Test
F-Test
Test Statistic 0.81
Test Statistic 0.81
1 P-Value 0.688
1 P-Value 0.688
Lev ene's Test
Sample

Lev ene's Test

Sample

Test Statistic 0.07

Test Statistic 0.07
P-Value 0.799
P-Value 0.799
2
2
Donot
Do notreject
rejectthe
the
200 300 400 500 600
nullhypothesis
null hypothesisforfor
200 300 400 500 600
95% Bonferroni Confidence Intervals for StDevs
95% Bonferroni Confidence Intervals for StDevs
equalityofofvariances
equality variances
sincethe
since theconfidence
confidence
intervalsfor
intervals forthe
the
1
1 standarddeviations
standard deviations
Sample

overlap.
Sample

overlap.
2
2

0 200 400 600 800 1000 1200

0 200 400 600 800 1000 1200
Data
Data