A drug company manufactures antacid that is known to be succ

A drug company manufactures antacid that is known to be successful in providing relief for 70% of people with heartburn. The company tests a new formula on a simple random sample of 150 people with heartburn. 114 of the subjects who try the new antacid report feeling some relief.

Conduct an appropriate hypothesis test, at the 10% level of significance, to determine if there is a difference in effectiveness between the old formula and the new formula.

Solution

Ho: there is no difference in the effectiveness between the two formulae H1: There is difference in the effectiveness between the two formulae. P0=0.7 P=114/150=0.76 Z=P-P0/sqrt(P0Q0/n) n=150 Z=1.60 p=0.1088 Since p value is > 0.1, we accept the null hypotesis and conclude that there is difference in the two formulae.