Business Statistics For Dummies, 2nd Edition

Chapter 12

Testing Hypotheses about the Population Mean

IN THIS CHAPTER

Understanding the hypothesis testing process

Testing hypotheses about two population means

Hypothesis testing is a multi-step statistical process which is used to test claims about a population measure, such as the mean. For example, you can use hypothesis testing on the following statements to determine whether they’re likely to be true:

• Mean income in the United States has risen over the past 25 years.
• The average age of the population of Egypt is above 30.
• The average return to the stocks in a portfolio is 10 percent.
• The United States and Canada have average work weeks identical in length.
• The average lifetime of brandy drinkers is 90.

You test hypotheses with a series of steps designed to show whether you can justify a claim. These steps apply to a lot of situations; for example, you can test claims about a population’s mean, a population’s variance, whether a population is normally distributed, and so forth. This chapter focuses on testing hypotheses about the mean value of a single population and the equality of the means of two different populations.

Applying the Key Steps in Hypothesis Testing for a Single Population Mean

Hypothesis testing requires sample data to draw conclusions about the characteristics ...