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# MCQs: Hypothesis Testing

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13) The owner of a bottling company is considering buying a new bottling machine. He has been testing two different machines that are being considered. After collecting 300 samples from each machine over several weeks, he was able to conduct a two sample z test.<p>He decided to utilize a 0.05 significant level for the test. The test was to address the claim that the mean weight of the bottles filled by the Orno machine was greater than the mean weight of the bottles filled by the Edne machine. The test statistics was 2.21. What is the decision regarding the hypothesis?

A. There is not enough data available to answer the question.

B. Reject the null hypothesis; there is a significant difference.

C. Accept the null hypothesis; there is not a significant difference.

D. This is a two tail test and the critical value for the test is 1.96.

14) Accounting procedures allow a business to evaluate their inventory at LIFO (Last In First Out) or FIFO (First In First Out). A manufacturer evaluated its finished goods inventory (in \$ thousands) for five products both ways. Based on the following results, is LIFO more effective in keeping the value of his inventory lower?
Product FIFO (F) LIFO (L)
1 225 221
2 119 100
3 100 113
4 212 200
5 248 245

The 5% level of significance was selected for the t value. This example is what type of test?

A. One sample test of means.

B. Two sample test of means.

C. Paired t-test.

D. Test of proportions.

15) Indy H2O is a water bottling company. They are looking at two different bottling manufacturers' equipment for the purpose of replacing some old equipment. The net weights of a sample of bottles filled by a machine manufactured by WTR, and the net weights of a sample filled by a similar machine manufactured by Target are (in grams):
WTR: 8, 9, 7, 8, 9, and 10
Target: 8, 10, 7, 11, 9, 12, 8, and 9

Testing the claim at the 0.05 level that the mean weight of the bottles filled by the Target machine is greater than the mean weight of the bottles filled by the WTR machine, what is the critical value?

A. 2.179

B. 2.145

C. 1.782

D. 1.761

16) Two different accounting procedures that are utilized by businesses as a way to evaluate their inventory are LIFO (Last In First Out) and FIFO (First In First Out). ABC manufacturer evaluated its finished goods inventory (in \$ thousands) for five products using both procedures. Based on the following results, is LIFO more effective in keeping the value of his inventory lower?
Product FIFO (F) LIFO (L)
1 225 221
2 119 100
3 100 113
4 212 200
5 248 245

The 5% level of significance was selected for the t value. The calculated test statistic was 1.93. What is the decision?

A. Fail to reject the null hypothesis and conclude LIFO is more effective.

B. Reject the null hypothesis and conclude LIFO is more effective.

C. Reject the alternate hypothesis and conclude LIFO is more effective.

D. Fail to reject the null hypothesis and conclude LIFO is not more effective.

17) You are conducting a two-tailed test of means, but your software package only calculates a one-tailed p-value equal to 0.13. The actual p-value for your test is

A. 0.13.

B. 0.065.

C. 0.26.

D. You need a table to calculate this value.

18) If the paired differences are normal in a test of mean differences, the distribution used for testing is the

A. normal distribution.

B. chi-square.

C. student t distribution.

D. f distribution.

19) Watson's TV claims that their televisions have the best performance record on the market. They advertise that after 3 years only 10% of their sold televisions have had any type of repairs. The president of the company wanted to confirm that this statement was correct. To do this, a sample of 60 sets was taken of sets that had been sold and were at least 3 years old. Twelve percent of these television sets had been in for repair. The null hypothesis is that there is no difference between the stated percent and the sample data. At the .05 significant level, what can we conclude about the null hypothesis?

A. The null hypothesis is rejected and the difference is significant.

B. The data fails to reject the null hypothesis.

C. The sample is too small to be able to decide.

D. The difference is too close to be able to decide.

20) A trolley system is being planned for the downtown area of Cincinnati, Ohio. To be able to proceed with this project, planners have indicated that at least 20% of the residents of the areas that would be covered need to support the idea. To determine the feelings of these city residents, a sample of 300 residents was taken. Seventeen percent of the sample responded that they would ride the trolley. Is this enough evidence for the project to proceed? Use the .05 level of significant.

A. There is enough evidence; move forward with the project.

B. A t-test would be the best choice for the test.

C. There is not enough evidence to support the moving forward with the project.

D. A decision cannot be made either yes or no.

A. No, there is not a significant difference.

B. Cannot be predicted based on this data.

C. Yes, there is a significant difference.

D. The business journal information is incorrect.

22) In the metro area there are four major supermarket chains. To determine if there was a difference between these stores, regarding their pricing of food, a consumer group did a test. In the Eastgate area of town, each of the supermarket chains has a store. Twenty-five common household items were selected for the test. These items were purchased at each of the four stores and the prices were compared. To analyze this data, what would be the best statistical test to use?

A. Regression correlation

B. Chi square

C. ANOVA

D. Two sample test

23) The F distribution is utilized with the ANOVA test. There are some basic assumptions associated with the distribution. Which of these assumptions is NOT valid?

A. It is negatively skewed.

B. Its values cannot be negative.

C. There is a family of distributions.

D. It is a continuous distribution.

24) Mr. Thomas owns three different restaurants in Cincinnati, Ohio. He is concerned about the profitability of the restaurants. There are monthly differences between the restaurants and he wants to determine if the differences in profit are significant. Mr. Thomas wants to do a statistical test to see if he should be concerned. The best test to address this problem would be

A. to conduct a paired t-test

B. to conduct a two sample test

C. to conduct an ANOVA test

D. to conduct two different t tests

25) Each Christmas season there is a hot toy that everyone must have, especially if you are under the age of nine. This prized toy can be purchased at many different types of stores. A consumer group wanted to determine if there was a difference in price for the toy depending on where the toy was purchased. Is the price of this toy the same for the different stores or is there a difference? In the Cincinnati area there are three main stores of concern: Wal-Mart, Meijer, and Toys R Us. Data was collected from different stores around the city. Prices will vary depending on the location of the store. The collected data is as follows (in dollars):
Wal-Mart Meijer Toys R Us
15 18 20
12 17 19
12 14 16
14 15 20
13 17 19

Conduct an ANOVA analysis of the data. Is there a significant difference between the three stores?

A. The sample needs to be larger to be able to answer the question.

B. There is a significant difference between the three stores.

C. A t-test would have been a better test.

D. There is not a significant difference between the three stores.

26) If an ANOVA test is conducted and the null hypothesis is rejected, what does this indicate?

A. Too many degrees of freedom

B. The variances are the same

C. A difference between at least one pair of population means

D. No difference between the population means

27) Robinson, a large department store, wanted to example to look at which credit cards were being utilized for purchases. A sample of 18 credit card sales was taken and recorded. The amounts charged for each of three different credit cards, MasterCard, Visa, and Discover, were: six MasterCard sales, seven Visa sales, and five Discover sales. The store used an ANOVA to test if the mean sales for each credit card were equal. What are the degrees of freedom for the F statistic?

A. 18 in the numerator, 3 in the denominator

B. 6 in the numerator, 15 in the denominator

C. 2 in the numerator, 15 in the denominator

D. 3 in the numerator, 18 in the denominator

##### Solution Summary

The solution provides answers to multiple choice questions on hypothesis testing. Relevant workings are also included.

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