Chapter 9: Hypothesis Testing

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Chapter 9 Hypothesis Testing

• Section 3 The P-Value in Hypothesis Testing

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Example

• A credit card company has lowered its annual
  interest rate. Records from before the rate
  change show the average outstanding balance on
  credit card accounts to be 576. The managers
  believe that reducing interest rates spurs
  greater use of credit cards, which results in
  higher outstanding balances. To test this claim,
  a random sample of 36 accounts was examined 6
  months after the interest rate reduction. The
  average outstanding balance was 615 with
  standard deviation s 120. Test the managers
  claim at the 5 and 1 level of significance.
• What is the smallest level of significance at
  which the sample data will tell us to reject Ho?

3
Example

• A consumer group suspected than an insecticide
  was effective for less than the advertised 12
  days, on the average. The group used a random
  sample of 36 and obtained a mean of 11.25 and a
  standard deviation of 3 days. Use a 5 level of
  significance. Find the P-value.

4
Example

• A construction company figures the cost of a
  project based an average idle time of 68 minutes
  per worker per shift. A new work schedule has
  been completed. To determine if the new schedule
  changes the average idle time, a random sample of
  49 workers was observed during a shift. The
  average idle time was 68 minutes with standard
  deviation 10 minutes. Use a 5 level of
  significance. Use the P-value of the sample
  statistic to make the decision.