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Thread: Hypothesis Testing; difference of means

  1. #1
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    Hypothesis Testing; difference of means

    In the CBI business confidence survey, employers are asked whether they expect order to increase in the next 12 months. In January 2009, 38 from a random sample of 120 employers reported they expected an increase in orders over the next 12 months. From an independent random of 210 employers asked in January 2010, 86 reported an expected increase in orders over the next 12 months. At the 5% significance level, calculate the power of a test of the null hypothesis that there is no difference in business confidence between the two dates, (against the 1-sided alternative that confidence had improved), given that the true proportion expecting an increase in orders was 0.35 in January 2009 and 0.45 in January 2010.

    How do i find the variance for this and the apparently you have to calculate the pooled mean aswell? How do you find these?
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  2. #2
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    Re: Hypothesis Testing; difference of means

    Hey sonam28.

    Do you know what test statistic you should use and why?

    When you have a difference of means you also have a variety of assumptions involved. You will need to match the assumptions with the test statistic and use the test statistic to get the power of the test.

    Please show us your working and thoughts for this problem.
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    Re: Hypothesis Testing; difference of means

    I assume you have to use a z-distribution because you approximate it from a bernoulli trial?
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  4. #4
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    Re: Hypothesis Testing; difference of means

    The difference between two means involves having two test statistics corresponding to two different averages [means] that have their own distribution.

    You take into account whether you can use a z-test and if they have some relation to each other.

    Can you show us your working with the above in mind?
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