In a sack containing a large number of beads 1/4 are coloured gold and the remainder are of different colours. A group of children use some of the beads in a craft lesson and do not replace them. Afterwards the teacher wishes to know whether or not the proportion of gold beads left in the sack has changed. He selects a random sample of 20 beads and finds that 2 of them are coloured gold.
Stating your hypotheses clearly test, at the 10% level of significance, whether or not there is evidence that the proportion of gold beads has changed.
H0: The proportion of gold beads is 1/4.
H1: The proportion of gold beads is not 1/4.
Let X be the number of gold beads in the sample of 20. Then under H0 X~Bin(20, 1/4), so X~Normal(5, 15/4) approximately. Since Phi(1.65) = 0.95, we should reject H0 if X is more than 1.65 standard deviations from 5, ie, if X is more than 1.65*sqrt(15/4) = 3.19521 from 5, ie, if X is less than 5 - 3.19521 or more than 5 + 3.19521.
The observed value of X is 2, so we do not reject H0.
There is insufficient evidence at the 10% to conclude that the proportion of gold beads has changed.