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HYPOTHESIS TESTING (TERMS (Critical Region
:star: a set of values of the…
HYPOTHESIS TESTING
WHAT?
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process of using data and statistical procedure to decide whether to reject or not to reject a hypothesis (statement) about a population parameter value or about the distribution characteristics
TYPES OF HYPOTHESIS
Ho : the null hypothesis
- statement in which a population parameter has specific value
- the starting point for investigation
- initially assumed to be true, thus to be tested
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TERMS
Critical Region
:star: a set of values of the test statistics for which the null hypothesis will be rejected
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TYPES OF ERRORS
Type I Error
:star: the acceptance of H1 when Ho is true
:star: the probability of commiting this error is called level of significance and denoted by a (alpha)
Type II Error
:star: failure to reject Ho when H1 is true
:star: the probability of commiting this error denoted by B (beta)
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PROCEDURE
- Define the question to be tested and formulate a hypothesis
- Choose appropriate test statistics and calculate the sample statistics value. Choice of test statistics depends on probability distribution of random variables
- Establish test criterion by determining critical value and region
- Draw conclusions whether to accept or to reject the null hypothesis
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