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𝐻0: 𝜇 =𝜇0
6
Alternative Hypothesis
Risk Confidence
Designation Description
𝜶 𝟏−𝜶
More than $100 million
0.001 0.999
Supercritical (Large loss of life, e.g. nuclear
0.1% 99.9%
disaster
0.01 0.99 Less than $100 million
Critical
1% 99% (A few lives lost)
0.05 0.95 Less than $100 thousand
Important
5% 95% (No lives lost, injuries occur)
0.10 0.90 Less than $500
Moderate
10% 90% (No injuries occur)
9
Type I and Type II Error
Decision
Accept Null Reject Null
Situation
Null is true Correct Type I error
( 𝛼 𝑒𝑟𝑟𝑜𝑟 )
𝐻0: 𝜇 = 𝜇0
Right tailed test @ 12
5% Significance level
Compare
Calculate the p-
the p-value P-value >
value at given
with Calculated Accept Ho
significance level
calculated value
from the table
value
P-value <
Calculated Reject Ho
value
14
Hypothesis
Testing of Z-TEST AND T-TEST
Means
Z test
A t-test is used for testing the mean of one population against a standard
or comparing the means of two populations if you do not
know the populations’ standard deviation and when you have a limited
sample (n < 30).
Matched pair test is used to compare the means before and after
something is done to the samples.
A t-test is often used because the samples are often small. However, a z-
test is used when the samples are large.
Hypothesis
testing for
difference Z-TEST, T-TEST
between
means
22
Z-Test for testing difference
between means
Hypothesis
Testing for
comparing PAIRED T-TEST
two related
samples
26
Paired T-Test for comparing
two related samples
Hypothesis
Testing of Z-TEST
proportions
28
Z-test for testing of proportions
Hypothesis
Testing for
difference Z-TEST
between
proportions
30
Z-test for testing difference
between proportions
Hypothesis
testing of
equality of F-TEST
variances of
two normal
populations
F-Test for testing equality of 32
variances of two normal
populations
A test of a statistical hypothesis, where the region of rejection is on only one side of the sampling
distribution, is called a one-tailed test. For example, suppose the null hypothesis
states that the mean is less than or equal to 10. The alternative hypothesis would be that the
mean is greater than 10. The region of rejection would consist of a range of numbers
located on the right side of sampling distribution; that is, a set of numbers greater than 10.
A test of a statistical hypothesis, where the region of rejection is on both sides of the sampling
distribution, is called a two-tailed test. For example, suppose the null hypothesis states
that the mean is equal to 10. The alternative hypothesis would be that the mean is less than 10 or
greater than 10. The region of rejection would consist of a range of numbers located
on both sides of sampling distribution; that is, the region of rejection would consist partly of
numbers that were less than 10 and partly of numbers that were greater than 10.
Decision Rules
P-value. The strength of evidence in support of a null hypothesis is measured by the P-value.
Suppose the test statistic is equal to S. The P-value is the probability of observing a
test statistic as extreme as S, assuming the null hypothesis is true. If the P-value is less than the
significance level, we reject the null hypothesis.
Region of acceptance. The region of acceptance is a range of values. If the test statistic falls
within the region of acceptance, the null hypothesis is not rejected. The region of
acceptance is defined so that the chance of making a Type I error is equal to the significance level.
The set of values outside the region of acceptance is called the region of rejection. If the test
statistic falls within the region of rejection, the null hypothesis is rejected. In such
cases, we say that the hypothesis has been rejected at the α level of significance.
These approaches are equivalent. Some statistics texts use the P-value approach; others use the
region of acceptance approach.